Walker Tile Shop uses the lower of cost or market method and has a periodic inventory system.Additional information follows:
$\begin{array}{lll}
&\text { Inventory}\
\text { Date}&\text { cost}&\text { Market}\
\text { January } 1,2010 & \$ 4,600 & \$ 4,000 \
\text { December } 31,2010 & 6,000 & 5,000 \
\text { December } 31.2011 & 9,000 & 8,200
\end{array}$ Required:
a. If the direct method of recording the reduction of inventory to market is in use, what would be the amount of the debit to Inventory on December 31, 2011?
b. If the allowance method is in use, what would be the debit to Income Summary on December 31,2010 ?

Question

Walker Tile Shop uses the lower of cost or market method and has a periodic inventory system.Additional information follows:
 $\begin{array}{lll}
&\text { Inventory}\
\text { Date}&\text { cost}&\text { Market}\
\text { January } 1,2010 & \$ 4,600 & \$ 4,000 \
\text { December } 31,2010 & 6,000 & 5,000 \
\text { December } 31.2011 & 9,000 & 8,200
\end{array}$ Required:
 a. If the direct method of recording the reduction of inventory to market is in use, what would be the amount of the debit to Inventory on December 31, 2011?
b. If the allowance method is in use, what would be the debit to Income Summary on December 31,2010 ?

Quizplus · Accepted Answer

The Answer of Walker Tile Shop uses the lower of cost or market method and has a periodic inventory system.Additional information follows:
 $\begin{array}{lll}
&\text { Inventory}\
\text { Date}&\text { cost}&\text { Market}\
\text { January } 1,2010 & \$ 4,600 & \$ 4,000 \
\text { December } 31,2010 & 6,000 & 5,000 \
\text { December } 31.2011 & 9,000 & 8,200
\end{array}$ Required:
 a. If the direct method of recording the reduction of inventory to market is in use, what would be the amount of the debit to Inventory on December 31, 2011?
b. If the allowance method is in use, what would be the debit to Income Summary on December 31,2010 ?

Walker Tile Shop Uses the Lower of Cost or Market