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trasher [3.6K]
3 years ago
15

In 2021, CPS Company changed its method of valuing inventory from the FIFO method to the average cost method. At December 31, 20

20, CPS’s inventories were $38 million (FIFO). CPS’s records indicated that the inventories would have totaled $28.6 million at December 31, 2020, if determined on an average cost basis. Required: 1. Prepare the journal entry to record the adjustment. (Ignore income taxes.)
Business
1 answer:
alekssr [168]3 years ago
8 0

Answer:

Entry to record adjustment:

COGS Dr $9.4m

         Inventory Cr $9.4m

Explanation:

The question relates to a change in accounting policy. According to IAS 8 (changes in accounting policy and estimate), a change in accounting policy is to be reflected retrospectively and prospectively, which means any changes should be implemented by bringing changes in the past records. Since CPS company has been using FIFO method, the inventory has been overstated in the financial statements. A shift to AVCO has resulted in a decrease in inventory value.

The value of inventory has to be reduced as a result of change in accounting policy (i.e $38m - $28.6m). This is the closing inventory so a reduction in the value of closing inventory results in an increase in cost of goods sold (COGS), therefore, the adjusting entry will be aimed at reducing inventory and increasing cost of goods sold, see as follows:

Entry:

COGS Dr $9.4m

         Inventory Cr $9.4m

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The correct answer is: Cost-Plus Pricing Strategy.

Explanation:

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Secondly, in this case where the manager notices such a difference in the prices of the two cans is due to the fact that the manufacturer put less commodities and less effort in the can of 16-ounce rather than in the other can of 32-ounce where there is more soup and therefore there is more cost in that can, establishing that a higher price must put in that one.

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Product Managers are expected to collaborate in planning the amount of upcoming Enabler work by establishing what? a. Accurate u
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Acceptance criteria are a formalized schedule of elements that assure that all user narratives are developed and complete synopses are carried into account. Acceptance Criteria are a collection of observations, respectively with a precise pass/fail outcome, that defines all specifications and are suitable at the Epic, Feature, and Story Level.

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brussels enterprises issues bonds at par dated january 1, 2021, that have a $2,700,000 par value, mature in four years, and pay
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The journal entry for the issuance of bonds for cash on January 1 is: Debit Cash $2,700,000, Credit Bonds payable $2,700,000.

<h3>Journal entry</h3>

1. January 1

Debit Cash $2,700,000

Credit Bonds payable $2,700,000

(To record  issuance of bonds for cash)

2. June 30

Debit bond  Interest expense $81,000

Credit Cash $81,000

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(To record  first semiannual interest payment)

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Debit bond  Interest expense $81,000

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(To record second semiannual interest payment)

3. December 31, 2021

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Credit Cash $2,700,000

(To record  payment of bonds payable)

Therefore the journal entry for the issuance of bonds for cash on January 1 is: Debit Cash $2,700,000, Credit Bonds payable $2,700,000.

Learn more about journal entries here:brainly.com/question/14279491

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Because manufacturers with jit systems produce merchandise closer to the time of sale, they can
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<span>These companies are able to reduce the inventories required to satisfy the demand of the retailers. With a JIT system, the company does not have to worry as much about waste product or overproducing, since the final item is being manufactured just before the deadline. This allows the company to run on a much tighter production schedule and lessens waste.</span>
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