The Army Store Has an Ending Inventory of $630,000

question 172

Essay

The Army Store has an ending inventory of $630,000. The current replacement cost of the inventory is $608,000. Before any adjustments at the end of the period, the cost of goods sold account has a balance of $900,000.
Required:
1. What journal entry if any, should The Army Store make?
2. At what amount should The Army Store report inventory on its balance sheet?
3. At what amount should The Army Store report cost of goods sold on the income statement?
4. What accounting principle(s) is or are most relevant to this situation?

Comprehend the importance and impact of cartel-like organizations (e.g., OPEC) on global markets.

Learn the definitions and examples of market terminologies and measurements, like cutthroat competition and collusion.

Analyze the effects of firm behaviors on competitors and how it informs competitive strategies.

Understand the limitations of using concentration ratios for analyzing industry competitiveness.

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Definitions:

Implicit Rate

The interest rate implied in the terms of a lease or financial arrangement, often used in leasing transactions to calculate lease payments.

Economic Life

The period over which an asset is expected to be economically useful to the owner.

Warranty

A guarantee provided by a seller that a product will meet certain performance standards or an offer to repair or replace defective goods within a certain time frame.

Implicit Rate Of Return

An interest rate that equates the present value of expected future cash flows of an investment to its initial cost.