Inventory Cost Flow Assumptions

question 129

Essay

Inventory cost flow assumptions
Kanga Corp.’s records reported an inventory cost of $51,400 and a net realizable value of $48,500 at December 31, 2019. At December 31, 2020, the records indicated a cost of $67,900 and a net realizable value of $59,500. All opening inventory had been sold during the year.
Instructions
Assuming that Kanga Corp. uses a perpetual inventory system, prepare the necessary December 31, 2020 entry under the direct method and the indirect method.

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Definitions:

Forecast

A prediction or estimate of future events, especially concerning weather or economic conditions.

Questionnaires

A research instrument consisting of a series of questions for the purpose of gathering information from respondents.

Delphi Method

A forecasting process framework based on the results of multiple rounds of questionnaires sent to a panel of experts.

Panel of Experts

A group of individuals with specialized knowledge or expertise in a particular field, convened to give advice or make decisions.