Problem 6-4A Report inventory using lower-of-cost-or-market (LO6) [The following
ID: 2459621 • Letter: P
Question
Problem 6-4A Report inventory using lower-of-cost-or-market (LO6) [The following information applies to the questions displayed below.j A local Chevrolet dealership carries the following types of vehicles Market (replacement cost) per Unit Cost per Unit Inventory ltems Vans Trucks 2-door sedans 4-door sedans Sports cars SUVs Quantity 2 5 $15,000 15,000 13,000 18,000 30,000 18,000 $17,000 16,000 11,000 15,000 27,000 26,000 6 2 Because of recent increases in gasoline prices, the car dealership has noticed a reduced demand for its SUVs, vans, and trucks References Section Break Problem 6-4A Report inventory using lower-of-cost-or-market (LO6) value 10.00 points You did not receive credit for this question in a previous att Problem 6-4A Part 1 Required: 1. Compute the total cost of the entire inventory. Total costExplanation / Answer
Answer 1. Calculation of Total Cost of Entire Inventory Inventory Items Quantity Cost per Unit Total Cost Vans 2 17,000 34,000 Trucks 5 16,000 80,000 2-doors sedans 1 11,000 11,000 4-doors sedans 6 15,000 90,000 Sports Cars 2 27,000 54,000 SUV's 7 26,000 182,000 Total Costs 451,000 Answer 2. Inventory Items Quantity Lower of Cost or Market Value per Unit Total Cost Vans 2 15,000 30,000 Trucks 5 15,000 75,000 2-doors sedans 1 11,000 11,000 4-doors sedans 6 15,000 90,000 Sports Cars 2 27,000 54,000 SUV's 7 18,000 126,000 Total Costs 386,000 Answer 3. Journal Entry Transaction Dr. Amt. Cr. Amt 1 Cost of Goods Sold Dr. 65,000 To Inventory 65,000 Answer 4. True A write-down in a company's inventory is recorded by reducing the amount reported as inventory. In other words, the asset account Inventory is reduced by a credit. The debit in the entry to write down inventory is reported in an account such as Loss on Write-Down of Inventory, an income statement account.