Part A
marks)
Dover Company began operations in 2018 and determined its ending inventory at cost and at a
LCNRV at December 31, 2018, and December 31, 2019. This information is presented below.
12/31/18
12/31/19
Instructions
Cost
£520,000
615,000
Net Realizable Value
£485,000
585,000
A- What should we do with the cost of goods sold at December 31, 2018, and December 31,
2019? Should we have increased or decreased it and by how much?
B- Calculate the net inventory balance and the allowance account at December 31, 2018, and
December 31, 2019, assuming that the inventory is recorded at LCNRV, using a
perpetual inventory system and the cost-of-goods-sold method.
Part B