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.

---

Definitions:

Excuses

Justifications or reasons given to explain why something was done or not done, often to avoid blame or responsibility.

Actor-observer Effect

The tendency to attribute one's own actions to external factors while attributing others' actions to their personality or disposition.

Unpredictable

Lacking a pattern or plan, not able to be predicted.

External Factors

Elements outside an individual that can influence their behavior, decisions, health, and psychology, including social, environmental, and economic factors.