Solution-What should be recorded as the carrying value

What should be recorded as the carrying value

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Q1. SM Supermarket makes use of the retail method in estimating its interim inventory balance. The current reporting period shows the following information:

Particulars	Cost	Retail
Beginning inventory	$800,000	$1,300,000
Purchases	5,900,000	9,500,000
Freight in	240,000
Purchase returns and allowances	460,000	600,000
Purchase discount	300,000
Markups, net		500,000
Markdowns, net		400,000
Sales		9,200,000
Sales returns and allowances		300,000
Sales discount		250,000
Normal inventory loss		400,000

At what amount would the estimated ending inventory be if SM Supermarket uses the average retail method?

Q2. On January 2, 2019, Anne Inc. sold equipment which has a carrying amount of $400,000 in exchange for a $600,000 4-year non-interest-bearing note that will be due on January 2, 2023. There was no established exchange price for the equipment. The prevailing rate of interest for a note of this type on January 2, 2019 was 10%. What should be recorded as the carrying value of the note receivable as of December 31, 2021 balance sheet?

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What should be recorded as the carrying value

Reference no: EM132850078

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