How is merchandising inventory valued when using the lower-of-cost-or-market rule? a) ABC Company paid $3,000 for its...

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Accounting

How is merchandising inventory valued when using thelower-of-cost-or-market rule? a)
ABC Company paid $3,000 for its merchandise inventory. At theend of the accounting period, the merchandise inventory can now bereplaced for $2,700 and this decline appears to be permanent. Writethe journal entry to write down the inventory to LCM:
What are the effects of merchandise inventory errors on thefinancial statements? Fill in the blanks below with “understated”or “overstated”:
a) If the ending merchandise inventory is overstated, then costof goods sold is _____, and the net income is_.
b) If the ending merchandise inventory is understated, then costof goods sold is , and the net income is_________.
How do we use inventory turnover and days’ sales in inventory toevaluate business performance?
a) What are the formulas for inventory turnover and days’ salesin inventory?
b) Calculate the inventory turnover and days’ sales in inventorybased on the information below (show work):
Cost of goods sold $11,000
Beginning merchandise inventory 4,000
Ending merchandise inventory 3,000

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1 The inventory is reduced in value by 300 ie 3000 2700 Journal entry is Cost of good sold Debit 300 to Merchandise Inventory Credit 300 2 a Cost of goods sold is Understated and net income is overstated b Cost of goods sold is Overstated and net income is See Answer

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