Question

Cub Company, a calendar-year entity, had 3,100 geothermal heating pumps in its beginning inventory for 20X1. On December 31, 20X0, the heating pumps had been adjusted down to $860 per unit from an actual cost of $980 per unit. It was the lower of cost or market. Cub purchased no additional units during 20X1. The following additional information is provided for 20X1:

Quarter	Date	Inventory (units)			Unit Market Value
1	March 31, 20X1		1,770			$	845
2	June 30, 20X1		1,440				890
3	September 30, 20X1		1,320				800
4	December 31, 20X1		920				830

Required:
Respond to the following two independent scenarios as requested.

a. Case 1: The company does not have sufficient experience with the seasonal market for geothermal pumps and assumes that any reductions in market value during the year will be permanent.

(1) Determine the cost of goods sold for each quarter.
a. Case 1: The company does not have sufficient experience with the seasonal market for geothermal pumps and assumes that any reductions in market value during the year will be permanent. (1) Determine the cost of goods sold for each quarter. Answer is not complete. Quarter Cost of goods sold $ 1,170,350 Total $ 1,170,350 (2) Verify the total cost of goods sold by computing annual cost of goods sold on a lower-of-cost-or-market basis. Cost of goods sold

Answer 1

Answers Quarter 1, cost of goods solid = (1330 X860 ) + (15 X 1746) = 1143800 +26550 = 1170350 Quarter I cast of goods sold = (330 x $845 ) - (1440x 45) = 278850 -7000 = 271,650 Quartea 1 cast or goods sold -(100x5$860 ) + C1320 x 60) = 182,400 Quarter IV., cost of goods sold = (1330x900)-G20 x $ 30 ) = 1036400

cost of goods sold Quarta - $1120350 $241650 $ 182, 4.00 V Total $_1036400 $2660800 cost d pocks odd = ((3160–900) X 860) + (736 x 30 ) = (3180 *860 + (92030) = 1902, 400 liceost of goods sold = $1,902, 400 bo Quarterly Id = 1330 X 860 $1143800 Quarter al, · Cosal of goods sold = 330* $ 860 =$ 283800

Quarter 3, cost of goods sold = 120 x $860 = $103200 Quartery cost of goods sold =(1330*4860) + (930x 30) = 1171400 Quarter | cast of goods sold no 143800 mais $ 283800 $103900 $11714 $9709200 to cost of goods sold - (3100--920) X360) +620X30) = (2180 X 860) + 220x30) = $1,902,400 [ticas de gand sold af 1909,bet