One write-down of 1,800, and why a LIFO store would have taken 3,600: AC300 Unit 8's inventory costing problem, finished, tests a composite music store's stock item by item. Searches like "ac 300 unit 8 assignment example", "ac300 unit 8 sample" and "ac300 unit 8 example" land here.
What a finished AC300 Unit 8 inventory costing problem looks like
Three blocks and a closing contrast. The first costs the ending violins by first in, first out: 120 on hand, 80 from the latest lot at 315 and 40 from the one before at 300, a total of 37,200, or 310 each. The second is a test table with one row per product line: digital pianos at a cost of 1,150 against net realizable value of 1,220, student violins at 310 against 295, amplifiers at 520 against 540. Each row runs from selling price through costs to sell to the lower figure. Inventory at cost is 114,400; at the lower figure, 112,600. The third block records the 1,800 write-down to cost of goods sold. The contrast paragraph applies lower of cost or market to the violins: replacement cost 280, ceiling 295, floor 227, market 280.
How a AC300 Unit 8 example is structured
The cost flow comes first because the test needs a cost to test, and first in, first out prices what remains from the most recent layers, so the sample shows which lots the 120 violins came from. The test table follows, item by item, which is the approach most AC300 problems specify, since a gain on one line then cannot offset a loss on another. Net realizable value is computed in its own columns rather than stated, because the costs to sell are where most answers slip. The write-down entry follows the table, charged to cost of goods sold. Since ASU 2015-11, the older market test applies only to LIFO and retail-method inventory, and the paragraph shows why its middle-value rule would have produced a 3,600 loss here.
Which lots the violins came from
One hundred twenty units priced from the two most recent purchases, 80 at 315 and 40 at 300, for 37,200 in total and 310 per unit.
Net realizable value, column by column
Selling price less costs to sell for each product line, computed rather than asserted: 1,220 for pianos, 295 for violins, 540 for amplifiers.
Item by item, not in total
Each line takes the lower of its own cost and net realizable value. Pianos and amplifiers stay at cost; only violins fall, by 15 per unit.
The 1,800 entry
Cost of goods sold debited and inventory credited for the write-down. A sentence notes that the reduced figure becomes the new cost basis, with no later reversal permitted.
The older rule, shown for contrast
Replacement cost 280 falls between the ceiling of 295 and the floor of 227, so market is 280 and a LIFO store would have written down 3,600.
Where marks go in AC300 Unit 8
The loss graders find most often is net realizable value taken as the selling price alone, with no costs to sell subtracted, which leaves the violins at cost and misses the write-down entirely. Applying the lower-of rule to the total rather than item by item is the next deduction when the problem specifies individual items, since the pianos' cushion quietly absorbs the violins' shortfall. Using the old ceiling-and-floor test on a first in, first out inventory applies a rule that no longer governs it and doubles the loss. Pricing the ending violins from the oldest lots reverses the cost flow and changes every figure after it. A write-down with no entry, or one charged to an account the problem did not name, is a lesser slip, as is a missing sentence on reversal.
Get a AC300 Unit 8 example written to your instructions
Item by item or in total? The Unit 8 test depends on the instructions, so mention which applies when sending the purchase lots, units on hand, selling prices, costs to sell and cost flow method, along with the rubric. The priced and tested inventory, entry included, arrives within 24-48h, free as a first custom sample.
AC300 Unit 8 questions, answered
Why does the test differ between FIFO and LIFO inventories?
Because the FASB simplified the rule in 2015 only for inventory measured by first in, first out or average cost, which now uses lower of cost and net realizable value. Inventory under last in, first out or the retail method still uses lower of cost or market, where market is the middle of replacement cost, a ceiling and a floor. The problem's cost method decides which test applies.
Can the write-down go to a separate loss account instead of cost of goods sold?
Yes, either is acceptable, and some AC300 problems ask for a loss account so the decline is visible on the income statement. Charging cost of goods sold is simpler and common when the amount is small. The sample uses the account the problem names, and when none is named it charges cost of goods sold and names that choice.
What happens if prices recover next year?
Nothing is reversed. Under US GAAP the written-down amount becomes the inventory's new cost, and a later recovery shows up only as a higher margin when the violins sell. International standards allow a reversal up to the original cost, which is a contrast some sections ask about. The sample mentions it in one sentence when the prompt raises international treatment.