1-B

At the end of the year, Randys Parts Company had the following items in inventory.

Item	Quantity	Unit Cost	Unit Market Value
P1	70	$ 92	$ 94
P2	35	65	75
P3	83	134	122
P4	43	65	73

Required a. Determine the amount of ending inventory using the lower-of-cost-or-market rule applied to each individual inventory item. b. Provide the general journal entry necessary to write down the inventory based on Requirement a. Assume that Randys Parts Company uses the perpetual inventory system. c. Determine the amount of ending inventory, assuming that the lower-of-cost-or-market rule is applied to the total inventory in aggregate. d. Provide the general journal entry necessary to write down the inventory based on Requirement c. Assume that Randys Parts Company uses the perpetual inventory system.

1-B

Toyland wishes to produce quarterly financial statements, but it takes a physical count of inventory only at year-end. The following historical data were taken from the Year 1 and Year 2 accounting records.

	Year 1	Year 2
Net sales	$ 153,000	$ 199,000
Cost of goods sold	66,100	85,260

At the end of the first quarter of Year 3, Toylands ledger had the following account balances.

Sales	$ 231,000
Purchases	164,000
Beginning inventory 1/1/Year 3	64,100
Ending inventory 3/31/Year 3	96,000

Based on purchases and sales, the Toyland accountant thinks inventory is low. Required Using the information provided, estimate the following for the first quarter of Year 3: a. Cost of goods sold. (Use the average cost of goods sold percentage.) (Round your intermediate percentage values to 2 decimal places and final answer to nearest whole dollar amount.) b. Ending inventory at March 31 based on the historical cost of goods sold percentage. c. Inventory shortage