Lower-Of-Cost-Or-Market
Elite Systems Sells a Single Product $$\begin{array} { | l | c | } \hline \text { Date } & \text { General Journal } \\\hline 20 & \\\hline\end{array}$$

question 80

Essay

Lower-of-cost-or-market
Elite Systems sells a single product. At December 31, the company's perpetual inventory records indicate 2,500 units on hand with a total cost (FIFO basis) of $155,000. The replacement cost of this product at this date is $35 per unit.
Prepare journal entries to record (a) the write-down of the inventory to the lower-of-cost-or-market value at December 31, and (b) the cash sale of 100 units on January 4 at a retail price of $50 per unit.
(a) Dec. 31
(b) Jan. 4
$$\begin{array} { | l | c | } \hline \text { Date } & \text { General Journal } \\\hline 20 & \\\hline\end{array}$$

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Definitions:

Packet of Rice

A pre-measured, packaged amount of rice, typically sold in a sealed bag or box.

Remaining

The portion of something that is left after other parts have been used, removed, or subtracted.

Variance

A measure of how much values in a set differ from the mean, used in statistics to represent variability within a dataset.

Random Variable

A variable whose values depend on outcomes of a random phenomenon, having a distribution that can be analyzed statistically.