At 12/31/17, the end of Jenner Company's first year of business, inventory was $6,100 and $5,100 at cost and at market, respectively. Following is data relative to the 12/31/18 inventory of Jenner:Item Original CostPer Unit ReplacementCostA $ .65 $ .45 B .45 .40 C .70 .75 D .75 .65 E .90 .85 Selling price is $1.00/unit for all items. Disposal costs amount to 10% of selling price and a "normal" profit is 30% of selling price. There are 1,500 units of each item in the 12/31/18 inventory. Prepare the entry at 12/31/17 necessary to implement the lower-of-cost-or-market procedure assuming Jenner uses a contra account for its balance sheet. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.)

Answer  and Explanation:



a.Dr Loss Due to decline of inventory to Market$1000    

Cr Allowance to Reduce Inventory to Market  $1000  

b.Items,Original cost per unit,Replacement cost,Net Realizable value,Net realizable value less normal profit,Appropriate Inventory,

A$.65$.45$.90$.60$.60

B$.45$.40$.90$.60$.45

C$.70$.75  $.90$.60$.70

D$.75         $.65$.90$.60$.65

E$.90$.85$.90$.60$.85

 $3.45(Total original cost per unit ) 

$3.25(Total appropriate inventory)

Therefore:

$3.25*1500 = $4,875    

c .

Dr Allowance to reduce inventory to market$1000    

Cr Cost of good sold  $1000  

Dr Loss due to decline of inventory to market$300    

Cr Allowance to reduce inventory to market  $300  

Cost of inventory at 12/31/21   will  be $4875    

d.Inventory losses  can be disclosed separately  on the income statement  and can as well be shown as part of cost of goods  been sold.

answer; proclamation of 1763;