6.9 Cumulative Questions
1) Journalize the following transactions for the next three independent situations.
Case 1
Gertrude Enterprises has determined that the replacement cost (current market value) of the December 31, 2014 ending inventory is $32,400.The inventory is recorded on the balance sheet at $33,500. What is the journal entry using the lower of cost or net realizable value rule?
Case 2
Austin’s Jewellers carries a line of silver bracelets. Austin’s Jewellers uses the FIFO method and a perpetual inventory system. The sales price of each bracelet is $105. Company records indicate the following activity for the bracelets for the month of March: Purchases of 200 units on January 1 at a cost of $30 per unit and purchases of 400 units on February 1 at a cost of $33 per unit. Sold 300 units on account on February 25. Journalize the sale of 300 units.
Case 3
On January 2, 2014, Bright Lights purchased showroom fixtures for $10,000 cash, expecting the fixtures to remain in service for five years. Bright Lights has depreciated the fixtures on a straight-line basis, with zero residual value. On September 30, 2015, Bright Lights sold the fixtures for $5,000 cash. Record both
the depreciation expense on the fixtures for 2015 and the sale of the fixtures on September 30, 2015.