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Example of net realizable value?
To exemplify a necessary write-down in the cost of inventory presume that an automobile dealer has a demonstrator on hand. The dealer obtained the auto at a cost of USD 18000. The auto had an actual selling price of USD 19600. Ever since the dealer used the auto as a demonstrator and the new models are coming in the auto now has an estimated selling price of only USD 18100. But the dealer is able to get the USD 18100 only if the demonstrator receives some scheduled maintenance including a tune-up and some paint damage repairs. This work in addition to the sales commission cost USD 300. The net realizable value of the demonstrator after that is USD 17800 (selling price of USD 18100 less costs of USD 300). For inventory purposes the required journal entry is as
Loss Due to the Decline in Market Value of Inventory (-SE) 200
Merchandise Inventory (-A) 200
To write down inventory to net realizable value ($18,000 -$17,800) This entry treats the USD 200 inventory turn down as a loss in the period in which the decline in utility occurred. Such an entry is essential only when the net realizable value is less than cost. If a net realizable value decline but still exceeds cost the dealer would continue to carry the item at cost.
Revenues emerge in the Income Statement credit column of the work sheet. The two revenue accounts in the Income Statement are credit column for Micro Train Company are service reve
From the following details, prepare a balance sheet acid test ratio = 2.5 current ratio = 1.5 net working capital = 10,00,000 fixed assets =? Share capital =? Proprietary ratio =
Q. What do you mean by Supplies on hand? Supplies on hand approximately each business uses supplies in its operations. It may classify supplies merely as supplies to include al
Determining needed adjustments Adjustments are required since certain changes take place during the accounting period. As time passes, although, the value of the asset is consu
Its depends on the credit period of the company i.e. A company credit period 30 days 85 of the debtors collection should be recovered with in credit period. We can say the Effectiv
Wings Inc., a software development firm, has stock outstanding as follows: 25,000 shares of cumulative 1%, preferred stock of $40 par, and 50,000 shares of $120 par common. Durin
Q. Classes and types of adjusting entries? Adjusting entries plunge into two broad classes deferred meaning to postpone or delay items and accrued meaning to grow or accumulate
Obtain the relevant authoritative literature on accounting for accounts receivable using the FASB''s Codification Research System at the FASB website. What is the specific citation
office supplies on hand at year-end amounted to 3000.
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