question archive Allegro Music sells musical equipment
Allegro Music sells musical equipment
Subject:AccountingPrice:2.87 Bought7
Allegro Music sells musical equipment. A detailed list of Allegro Music’s inventory follows:
| Inventory item | Number of units — year end | Cost per unit | Total cost | NRV* per unit | Total NRV | LCNRV** | |
| Chime Set | 3 | $750 | 2,250 | 790 | 2,370 | ||
| Cymbals | 4 | 70 | 280 | 85 | 340 | ||
| Drum Sets | 3 | 450 | 1,350 | 525 | 1,575 | ||
| Flutes | 5 | 650 | 3,250 | 775 | 3,875 | ||
| Violins | 3 | 1,500 | 4,500 | 1,650 | 4,950 | ||
| Guitars | 7 | 62 | 434 | 45 | 315 | ||
| Guitars-acoustic | 9 | 125 | 1,125 | 132 | 1,188 | ||
| Guitars-electric | 12 | 190 | 2,280 | 225 | 2,700 | ||
| Keyboards | 4 | 2,200 | 8,800 | 2,100 | 8,400 | ||
| Pianos-entry | 3 | 2,300 | 6,900 | 2,500 | 7,500 | ||
| Pianos-introductory | 5 | 4,500 | 22,500 | 4,900 | 24,500 | ||
| Pianos-intermediate | 2 | 12,000 | 24,000 | 14,200 | 28,400 | ||
| Pianos-professional | 1 | 22,500 | 22,500 | 25,000 | 25,000 | ||
| Pianos-upright | 2 | 5,000 | 10,000 | 7,500 | 15,000 | ||
| Recorders | 25 | 7 | 175 | 10 | 250 | ||
| Saxophones | 3 | 575 | 1,725 | 675 | 2,025 | ||
| Triangles | 5 | 55 | 275 | 65 | 325 | ||
| Xylophones | 4 | 245 | 980 | 300 | 1,200 | ||
| TOTAL= 113,324 | Total= 129,913 |
*NRV = net realizable value
**LCNRV = lower of cost and net realizable value
Required:
Complete the schedule above and prepare the year-end adjusting entry to record the inventory at the lower of cost and net realizable value.
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Answer:
| Allegro Music | A | B | C=A*B | D | E=A*D | F= Lower of C or E |
| Inventory item | Number of units | Cost per unit | Total cost | NRV* per unit | Total NRV | LCNRV** |
| Chime Set | 3.00 | 750.00 | 2,250.00 | 790.00 | 2,370.00 | 2,250.00 |
| Cymbals | 4.00 | 70.00 | 280.00 | 85.00 | 340.00 | 280.00 |
| Drum Sets | 3.00 | 450.00 | 1,350.00 | 525.00 | 1,575.00 | 1,350.00 |
| Flutes | 5.00 | 650.00 | 3,250.00 | 775.00 | 3,875.00 | 3,250.00 |
| Violins | 3.00 | 1,500.00 | 4,500.00 | 1,650.00 | 4,950.00 | 4,500.00 |
| Guitars | 7.00 | 62.00 | 434.00 | 45.00 | 315.00 | 315.00 |
| Guitars-acoustic | 9.00 | 125.00 | 1,125.00 | 132.00 | 1,188.00 | 1,125.00 |
| Guitars-electric | 12.00 | 190.00 | 2,280.00 | 225.00 | 2,700.00 | 2,280.00 |
| Keyboards | 4.00 | 2,200.00 | 8,800.00 | 2,100.00 | 8,400.00 | 8,400.00 |
| Pianos-entry | 3.00 | 2,300.00 | 6,900.00 | 2,500.00 | 7,500.00 | 6,900.00 |
| Pianos-introductory | 5.00 | 4,500.00 | 22,500.00 | 4,900.00 | 24,500.00 | 22,500.00 |
| Pianos-intermediate | 2.00 | 12,000.00 | 24,000.00 | 14,200.00 | 28,400.00 | 24,000.00 |
| Pianos-professional | 1.00 | 22,500.00 | 22,500.00 | 25,000.00 | 25,000.00 | 22,500.00 |
| Pianos-upright | 2.00 | 5,000.00 | 10,000.00 | 7,500.00 | 15,000.00 | 10,000.00 |
| Recorders | 25.00 | 7.00 | 175.00 | 10.00 | 250.00 | 175.00 |
| Saxophones | 3.00 | 575.00 | 1,725.00 | 675.00 | 2,025.00 | 1,725.00 |
| Triangles | 5.00 | 55.00 | 275.00 | 65.00 | 325.00 | 275.00 |
| Xylophones | 4.00 | 245.00 | 980.00 | 300.00 | 1,200.00 | 980.00 |
| Ending Inventory | 113,324.00 | 129,913.00 | 112,805.00 | |||
| Reduction in value | 519.00 |
| Year end entry | ||
| Account | Debit $ | Credit $ |
| Loss on valuation of inventory | 519.00 | |
| Inventory | 519.00 |
