Answer:
Cullumber Company
The ending inventory is:
= $4,888.
Explanation:
a) Data and Calculations:
Item Units Unit Cost Net Realizable Value Value of Ending
Cameras: Inventory (LCNRV)
Minolta 3 $172 $152 $456 ($152 * 3)
Canon 9 140 170 1,260 ($140 * 9)
Light meters:
Vivitar 13 130 100 1,300 ($100 * 13)
Kodak 16 117 128 1,872 ($117 * 16)
Total value of Ending Inventory based on LCNRV = $4,888
b) The Lower of cost- or net realizable value method of valuing ending inventory determines the value by choosing the lower value between the cost price of the inventory and the net realizable value. The purpose that is served by using the LCNRV method is that it reflects the decrease of inventory value when it goes below its original cost while at the same time it does not recognize the increased market value when the cost is lower.
Answer:
1. Increased assets (Cash) – Increased stockholders’ equity (Common Stock)
2. Decreased stockholders’ equity (Rent Expense) - Decreased assets (Cash)
3. Increased assets (Cash) – Increased stockholders’ equity (Service revenue)
4. Increased assets (Accounts receivable) – Increased stockholders’ equity (Service revenue)
5. Decreased liabilities (Cash Dividends Payable) – Decreased assets (Cash)
6. Decreased stockholders’ equity (Advertising Expense) - Increased liabilities (Accounts payable)
7. Increased assets (Cash) – Decreased assets (Accounts receivable)
8. Increased assets (Equipment) – Decreased assets (Cash)
9. Increased assets (Equipment) – Increased liabilities (Accounts payable)
Explanation:
Accounting Equation Formula:
Assets = Liabilities + Owner's Equity
This equation tells us that Assets are increased by Debits and decreased by Credits, instead, Liabilities and Stockholders´ Equity decreased by Debits and increased by Credits. In the answer, Debits are represented by the left side of the note, and Credits by the right side of the note.
Answer:A. May make low volume customers appear more profitable than they are.
Explanation:
The allocation of fixed cost based on sales volume will increase cost allocated to large volume sales unit which will invariably reduce their profit and will reduce the cost allocated to low volume sales which may increase their profit.
It does not affect the overall firm profitability not customers contribution margin.