# accounting

posted by Nick

I have tried to figure out how to do this for four days and my textbook does not give an example on how to do this problem.
Lower-of-Cost-or-Market
Corrs Company began operations in 2007 and determined its ending inventory at cost and at lower of cost or market at December 31, 2007, and December 31, 2008. This information is presented below:

Cost Lower of Cost or
Market
12/31/07 \$346,000 \$327,000
12/31/08 410,000 395,000

Instructions:

a.)Prepare the journal entries required at December 31, 2007 and December 31, 2008, assuming that the inventory is recorded at market, and a perpetual inventory system (direct method) is used.

b.)Prepare journal entries required at December 31, 2007, and December 31, 2008, assuming that the inventory is recorded at cost and an allowance account is adjusted at each year-end under a perpetual system.

c.)Which of the two methods above provides the higher net income in each year?

All I am asking for is somebody to give me an example on how to do this problem after that I should be able to do this.

1. SraJMcGin

Here are some Accounting Tutorials for you to look through:

Sra

2. Nick

SraJMcGin,
Thank you for the information, but I still do not know how to set this problem up. The site was no help.

## Similar Questions

1. ### MATH

Jones Company had 100 units in beginning inventory at a total cost of \$10,000.The company purchased 200 units at a total cost of \$26,000. At the end of the year, Jones had 80 units in ending inventory. Compute the cost of the ending …
2. ### Accounting

Jones Company had 100 units in beginning inventory at a total cost of \$10,000.The company purchased 200 units at a total cost of \$26,000. At the end of the year, Jones had 80 units in ending inventory. Instructions (a) Compute the …
3. ### COLLEGE ACCOUNTING

Sunset Company uses the periodic inventory method and had the following inventory information available: Units Unit Cost 1/1 Beginning Inventory 200 \$6.20 1/20 Purchase 300 \$6.50 7/25 Purchase 200 \$6.80 10/20 Purchase 300 \$7.00 A physical …
4. ### accounting

Jones Company had 100 units in beginning inventory at a total cost of \$10,000. The company purchased 200 units at a total cost of \$26,000. At the end of the year, Jones had 80 units in ending inventory. Compute the cost of the ending …
5. ### accounting

A merchandising company wants to include the cost of operating its warehouse in the cost of inventory. The company’s controller argues that the cost of the warehouse is a reasonable and necessary cost of getting the inventory ready …
6. ### accounting

I already know what the different inventory cost flow assumptions are, but what I do not know is how might the choice of cost flow assumption affect the company's cost of goods sold and ending inventory balance?
7. ### accounting

In its first month of operations, Danielle Company made three purchases of merchandise in the following sequence: (1) 161 units at \$17, (2) 414 units at \$18, and (3) 115 units at \$19. Assuming there are 271 units on hand, compute the …
8. ### accounting

using the following information, calculate inventory turnover ratio, the average days in inventory, and the gross profit ratio for Howard Company for the year ended december 31, 2011( round to two decimal places) sales \$225,00 Cost …