Thara1990
Jan 30, 2011, 02:17 PM
Identify assumptions and concepts and correct entries.
The company used the average cost formula to determine that the cost of merchandise inventory at December 31 was $65,000. On December 31, it would have cost $80,000 to replace the merchandise inventory, so the following entry was made:
Merchandise Inventory (DR.) $15,000
Gain on Inventory (CR.) $15,000
The company used the average cost formula to determine that the cost of merchandise inventory at December 31 was $65,000. On December 31, it would have cost $80,000 to replace the merchandise inventory, so the following entry was made:
Merchandise Inventory (DR.) $15,000
Gain on Inventory (CR.) $15,000