I am working on a schedule of cost of goods sold do you add the purchase returns and allowances and the sales returns and allowances together for the total on purchase returns and allowances or leave sales out?

Leave out

I am working on financial accounting and it is asking to Determine the amount of ending inven tory, assuming that the lower-of-cost-or-market rule is applied to the inventory in aggregate. I can not find anything on what this means. My total cost is $7110; total market is $7080 and Ind Item Lower of cost or market is $6310.

It then asks to provide the general journal entry necessary to write down the inventory based on this requirement using perpetual inventory system. Please help

Hi, let me ask first, from where are you? What is the accounting standards you are using? US GAAP or IAS? But I think you are using US GAAP. What is that "Ind Item"?

My initial answer would be

Dr. Loss on Inventory write-down to LCM $30
Cr. Allowance on Inventory write-down to LCM $30

From Illinois and using GAAP and IT is Individual Item lower of cost or market

Where are you located? I am going to very honest I am not good in this stuff.

I'm not sure aboutyour answer to my question. What is or how do you get the ending inventory, assuming that the lower-of-cost- of market rulet is applied to the inventory in aggregate? I don't know what that means and can not find anything on it.

Are you there?

Sorry for the very late reply, I had problems logging in to this site yesterday, I don't know why...

I'm from the Philippines, we are using IAS.
A OK, it if is in aggregate, my answer should be correct.
If it is individual, then just change the amount to 800 (7110-6310).

To get the ending inventory:
Inventory balance $7,110
Less: Allowance for Inventory write-down to LCM $30 ($800 for individual)
Net Inventory balance $7,080 ($6,310 for individual)

In short, the whole topic is to let the balance of inventory be the lower of cost or market value.
you can study in detail from this site http://www.accountingcoach.com/online-accounting-course/27Xpg05.html#lower-cost-market-accounting

So what goes on the general journal entry necessary to write down the inventory

I understand my individual inventory item is $6310
It says determine the amont of ending inventory applies to the inventory in aggregate. Do I get this off the quantity and unit cost totals.