What should be recorded as the carrying value

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Q1. SM Supermarket makes use of the retail method in estimating its interim inventory balance. The current reporting period shows the following information:

Particulars

Cost

Retail

Beginning inventory

$800,000

$1,300,000

Purchases

5,900,000

9,500,000

Freight in

240,000

 

Purchase returns and allowances

460,000

600,000

Purchase discount

300,000

 

Markups, net

 

500,000

Markdowns, net

 

400,000

Sales

 

9,200,000

Sales returns and allowances

 

300,000

Sales discount

 

250,000

Normal inventory loss

 

400,000

At what amount would the estimated ending inventory be if SM Supermarket uses the average retail method?

Q2. On January 2, 2019, Anne Inc. sold equipment which has a carrying amount of $400,000 in exchange for a $600,000 4-year non-interest-bearing note that will be due on January 2, 2023. There was no established exchange price for the equipment. The prevailing rate of interest for a note of this type on January 2, 2019 was 10%. What should be recorded as the carrying value of the note receivable as of December 31, 2021 balance sheet?

Reference no: EM132850078

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