The Picture Store Has an Ending Inventory of $832,500

question 165

Essay

The Picture Store has an ending inventory of $832,500. The current replacement cost of the inventory is $833,000. Before any adjustments at the end of the period, the cost of goods sold account has a balance of $1,508,200.
Required:
1. What journal entry if any, should The Picture Store make?
2. At what amount should The Picture Store report inventory on its balance sheet?
3. At what amount should The Picture Store report cost of goods sold on the income statement?
4. What accounting principle is most relevant to this situation?

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Definitions:

Wilcoxon Rank Sum Test

A non-parametric statistical test used to compare two independent samples to assess whether their populations have identical distribution.

Sign Test

A non-parametric statistical test used to assess the difference between matched pairs of samples when the specific data measurement scale does not meet the requirements for parametric testing.

Binomial Tables

Pre-calculated tables used to find the probability of observing a certain number of successes in a fixed number of binary experiments.

Large-sample Z Statistic

A statistical measure used when the sample size is large, typically applied in hypothesis testing to determine if there is a significant difference between sample statistics and population parameters.