S6-11 Applying the lower-of-cost-or-market rule
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Assume that a Rocket Burger restaurant has the following perpetual inventory record for hamburger patties:
Hamburger Patties
| date | purchases | cost of goods sold | Inventory on Hand |
|---|---|---|---|
| Feb 9 | $470 | $470 | |
| 22 | $280 | $290 | |
| 28 | $210 | $460 |
Requirements
R1. At Feb 28, the accountant for the restaurant determines that the current replacement cost of the ending inventory is $447. Make any adjusting entry needed to apply the lower of cost or market rule. Inventory would be reported on the balance sheet at what value on Feb 28?
R2. Inventory would be reported on the balance sheet at what value if Rocket uses the average cost method?
11 years ago
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