Hougton Company Follows U

Essay

Hougton Company follows U.S.GAAP and has the following inventory data available:
The company has 1,000 shirts of each style in stock at year end.The company uses the indirect method to record the lower-of-cost-or-market rule.
Required:
1.a.Determine the value of inventory reported on the balance sheet at year end if the lower-of-cost-or-market rule is applied to each inventory item.
b.Prepare the journal entry required at year end.
2.a.Determine the value of inventory reported on the balance sheet at year end if the lower-of-cost-or-market rule is applied to the shirts as a group of items.Use gender to group the items.
b.Prepare the journal entry required at year end.