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""Late in the year, software City began carrying...

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""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: Purchase Date Qty Unit Cost Total Cost Nov 14. 8, $400, $3,200 Dec 12. 20, 310, 6,200 Total available for sale at Dec 31. 28, $9,400(TC) a) At December 31, Software City takes a physical inventory and finds that all 28 units of WordCrafter are on hand. However, the current replacement cost(wholesale price) of this product is only $250 per unit. Prepare the entries to record: 1. This write-down of the inventory to the lower-of-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 accounts.) 2. 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.

 

Paper#8389 | Written in 18-Jul-2015

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