NAMA : CHRISTIAN CANDRA WIJAYA

NIM : F0321067

KELAS :C

E9.1 (LO1) (LCNRV) The inventory of Oheto Company on December 31, 2019, consists of the following
items.

Part No. 121 is obsolete and has a realizable value of $1 each as scrap.

Instructions

a. Determine the inventory as of December 31, 2019, by the LCNRV method, applying this method to
each item.

b. Determine the inventory by the LCNRV method, applying the method to the total of the inventory.

Answer

a) LCNRV setiap item

Part No. Cost Net Realizable Value LCNRY by Individual Items

110 $ 57.000 $ 60.000 $ 57.000
111 $ 60.000 $ 52.000 $ 52.000
112 $ 40.000 $ 38.000 $ 38.000
113 $ 34.000 $ 36.000 $ 34.000
120 $ 82.000 $ 83.200 $ 82.000
121 $ 25.600 $ 1.600 $ 1.600
122 $ 72.000 $ 70.500 $ 70.500
Total Final Inventory $ 335.100
 b) LCNRV pada total inventory

Part No. Cost Net Realizable Value LCNRY by Individual Items

110 $ 57.000 $ 60.000 $ 57.000
111 $ 60.000 $ 52.000 $ 52.000
112 $ 40.000 $ 38.000 $ 38.000
113 $ 34.000 $ 36.000 $ 34.000
120 $ 82.000 $ 83.200 $ 82.000
121 $ 25.600 $ 1.600 $ 1.600
122 $ 72.000 $ 70.500 $ 70.500
Total $ 370.600 $ 341.300 $ 335.100
Jadi total nilai inventory akan sebesar $335.100,00

E9.5 (LO1) (LCNRV—Valuation Account) Presented below is information related to Knight Enterprises.

Instructions

a. From the information, prepare (as far as the data permit) monthly income statements in columnar
form for February, March, and April. The inventory is to be shown in the statement at cost; the gain or
loss due to market fluctuations is to be shown separately (using a valuation account).

b. Prepare the journal entry required to establish the valuation account at January 31 and entries to
adjust it monthly thereafter.

Answer

a) Loss or gain due to market fluctuations

Loss or Gain Due to Market Fluctuations

Jan, 31 Feb, 28 Mar, 31 Apr, 30
Inventory at cost 15000 15100 17000 14000
Inventory at LCNRV 14500 12600 15600 15300
Allowance to reduce inventory to market 500 2500 1400 700
Gain or Loss 2000 -1100 -700
 Monthly Income statement

February March April

Sales 29000 35000 40000
COGS
Beginning Inventory 15000 15100 17000
Purchase 17000 24000 26500
Cost of goods available 32000 39100 43500
Ending inventory 12100 16900 17000 22100 14000 29500
Gross Profit 12100 12900 10500
Gain or Loss -2000 1100 700
$ 10.100 $ 14.000 $ 11.200

b) January, 1 Loss due to Market decline of Inventory 500

Allowance to Reduce Inventory to Market 500
February,28 Loss due to Market decline of Inventory 2000
Allowance to Reduce Inventory to Market 2000
March, 31 Allowance to Reduce Inventory to Market 1100
Recovery of Loss due to market decline 1100
April, 30 Allowance to Reduce Inventory to Market 700
Recovery of Loss due to market decline 700

E9.6 (LO1) (LCNRV—Error Effect) LaGreca SA uses the LCNRV method, on an individual-item basis, in
pricing its inventory items. The inventory at December 31, 2019, included product X. Relevant per-unit
data for product X are as follows.

There were 1,000 units of product X on hand at December 31, 2019. Product X was incorrectly valued at
€38 per unit for reporting purposes. All 1,000 units were sold in 2020.

Instructions

Compute the effect of this error on net income for 2019 and the effect on net income for 2020, and
indicate the direction of the misstatement for each year.

Answer
 Net Realizable Value (harga penjualan) (50-14) 36
Net Realizable Value – profit normal (36-9) 27
Replacement Cost 38
Cost (harga penjualan) 36
Lower of Cost or market 36

$38 (replacement cost) - $36 (harga penjualan)= $2 per unit.

$2 X 1,000 units = $2,000.

Jika ending inventory overstated, maka net income akan overstated. Jika beginning inventory
overstated, maka net income akan understated. Oleh karena itu, net income tahun 2010 overstated
$2,000 and net income 2011 understated $2,000.

E9.14 (LO3) (Gross Profit Method) Astaire ASA uses the gross profit method to estimate inventory for
monthly reporting purposes. Presented below is information for the month of May.

Instructions

a. Compute the estimated inventory at May 31, assuming that the gross profit is 25% of sales.

b. Compute the estimated inventory at May 31, assuming that the gross profit is 25% of cost.

Answer

a) Gross profit 25% dari penjualan

Beginning Inventory, May 1 160000

Purchase 670000
less : pruchase discounts 12000 658000
Goods Available for Sale 818000
Sales 1000000
Less : sales returns 70000
Net Sales 930000
Less : gross profit 250000 680000
Estimate Ending Inventory 138000
b) Gross Profit 25% dari cost
 Beginning Inventory, May 1 160000
Purchase 670000
less : pruchase discounts 12000 658000
Goods Available for Sale 818000
Sales 1000000
Less : sales returns 70000
Net Sales 930000
Less : gross profit 204500 725500
Estimate Ending Inventory 92500

E9.16 (LO3) (Gross Profit Method) Castlevania SA lost most of its inventory in a fire in December just
before the year-end physical inventory was taken. The company's books disclosed the following.

Merchandise with a selling price of R$21,000 remained undamaged after the fire. Damaged merchandise
with an original selling price of R$15,000 had a net realizable value of R$5,300.

Instructions

Compute the amount of the loss as a result of the fire, assuming that the company had no insurance
coverage.

Answer

Beginning Inventory 170.000

Purchase 450.000

620.000

Purchase returns (30.000)

Goods available (at cost) 590.000

Sales 650.000

Sales return (24.000)

Net Sales 626.000

Less : gross profit (30%*626.000) (187.800) 438.200

Estimated Ending Inventory 151.800

Less : goods on hand-undamaged (21000-(1-30%)) (14.700)

Less : goods on hand-damaged (5.300)

Fire loss on inventory $131.800