Mariah Company has inventory at the end of the year with a historical cost of $ 74 comma 000. Mariah Company uses the perpetual
inventory system. Under the LCM rule, the current replacement cost is $ 72 comma 600. The company uses LIFO. Under U.S. GAAP, the journal entry to record the writeminusdown to LCM will:
Explanation: The lower of cost or LCM rule indicates that a company needs to value it's inventory at the end of the year at whatever cost is lower, between the actual cost of the inventory or its market price currently. This is in accordance with US GAAP.
In Mariah Company the historical cost, which is the actual cost of the inventory and thus what it is valued at in the books, is $74000. Replacement cost, which is how much it would cost to replace an asset based on market rates, is only $72600. The replacement cost is thus lower. Since the inventory is still valued at historical cost in the books, it will have to been written down to the replacement cost value. To do this the difference between both costs will need to be deduced. Difference is thus: $74000 - $72600 =$1400.
When write down occurs, this is expensed to cost of goods sold. This is because there is a decrease in closing inventories. If there is a decrease in this figure then it will lead to a subsequent increase in cost of goods sold, leading to it being debited to show this increase (remember the formula to calculate cost of goods sold). Inventory is credited as the value of this inventory has decreased, and inventories decrease on the credit side.
First it's not sound investment advice to put all his savings into an investment because as the narrative rightly points out, he may have other needs.
Second, high growth stock are also
high risk
they only pay in the long term only if the company is successful because dividends are re-invested which is one of the reasons the companies grow quickly.
Although they are high risk, they also have great advantages such as:
High growth rate: this means if all goes well David will enjoy a good return on his investment;
It's also a way to protect his money from erosion by inflation
What can David do?
Subject to the advise of a professional investment professional
David needs to take into consideration his immediate needs, set aside some funds to take care of that.
Invest the balance into a mix of high growth rate stock which are high yielding but risky and low growth rate but secure investment like government bonds.
Start a small business by the side or get a job in the interim as he continues with his new life.
c. make an accurate diagnosis of what is causing the problem
Explanation:
The manager of the fast-food restaurant should understand the underlying problem first. Working on the assumption that it's because of a competitor marketing campaign may not give the desired results. A customer's preference may change due to many reasons.
The manager should make an accurate diagnosis of the problem first. With a precise reason as to why customers as fleeing, then he can develop a counter-strategy. Retaining the current member of the crew will not reverse the situation. Reducing prices may affect profitability, which is not the desired result. With low prices, some customers may question the quality of the breakfast.
