Question

For the weighted-average method, round calculations to two decimal places. If required, round your final answers to the nearest cent.

Instructions:

For the weighted-average method, round calculations to two decimal places. If required, round your final answers to the nearest cent.

1. Calculate the total amount to be assigned to the ending inventory under each of the following periodic inventory methods.

2. Assume that the market price per unit (cost to replace) of Stalberg's inventory on December 31, 20--, was $26. Calculate the total amount to be assigned to the ending inventory on December 31 under each of the following methods.

3. What journal entry would be made under lower-of-cost-or-market for parts 2(a) FIFO and 2(b) Weighted-average? If no entry is required, type "No entry required" in the account name box and leave the amount boxes blank or enter "0".

Stalberg Company's beginning inventory and purchases during the fiscal year ended December 31, 20--, were as follows:

		Units	Unit Price		Total Cost
Jan. 1	Beginning inventory	10	$21		$210
Mar. 5	1st purchase	10	22		220
Sept. 9	2nd purchase	10	25		250
Dec. 8	3rd purchase	10	30		300
		40			$980

There are 10 units of inventory on hand on December 31.

Inventory Valuation

For the weighted-average method, round calculations to two decimal places. If required, round your final answers to the nearest cent.

1. Calculate the total amount to be assigned to the ending inventory under each of the following periodic inventory methods:

a. FIFO
$

b. Weighted-average
$

2. Assume that the market price per unit (cost to replace) of Stalberg's inventory on December 31, 20--, was $26. Calculate the total amount to be assigned to the ending inventory on December 31 under each of the following methods:

a. FIFO lower-of-cost-or-market
$

b. Weighted-average lower-of-cost-or-market
$

Answer 1

1.
a. FIFO		$300.00
b. Weighted average		$245.00

Working:
		Units	Unit Price	Total Cost
Jan. 1	Beginning inventory	10	21	210
Mar. 5	1st purchase	10	22	220
Sept. 9	2nd purchase	10	25	250
Dec. 8	3rd purchase	10	30	300
		40		980
	Weighted average cost			24.50
Ending inventory		10 units
Last purchase 10 units @$30 per unit
Inventory value under FIFO = 10 x 30 = $300
Inventory value under weighted average = 10 x 24.50 = $245

2.

a. FIFO --- lower of cost -or - market = $260.00
b. Weighted average -- lowe-of-cost or market = $245.00

Working:

2. Market price as at December 31, 20-- is $26.00

Market value of the inventory = 10 x $26 = $260.00