Prepare the entries to the cash sale of 15 wordcrafter

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Reference no: EM13597798

Late in the year, Software City began carrying WordCrafter, a new word processing software program. At December 31, Software City's perpetual inventory records included the following cost layers in its inventory of WordCrafter programs:

Quan Unit Cost
Nov 14th 8 400 3200
Dec 12th 20 310 6200

Available Dec 31st 28 $9400

a. At December 31, Software City takes a physical inventory and finds that all 28 units of Word-Crafter are on hand. However, the current replacement cost (wholesale price) of this product is only $250 per unit.

a-1 Prepare the entries to record this write-down of the inventory to the lower-of-cost-or-market at December 31. (Company policy is to charge LCM adjustments of less than $2,000 to Cost of Goods Sold and larger amounts to a separate loss account.)

a-2 Prepare the entries to the cash sale of 15 WordCrafter programs on January 9, at a retail price of $350 each. Assume that Software City uses the FIFO flow assumption?

Reference no: EM13597798

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