Question: Richards Inc. pays a vendor cash of $16,050 at the beginning of the year for goods that Richards will ultimately include in its inventory. In addition, Richards associates the following costs with the purchase: Freight in $500 Freight out 150 Normal spoilage 300 Abnormal spoilage 450 Marketing costs 100 At the end of the year, Richards is valuing the inventory in current dollars in order to prepare its financial statements. As of year-end, the inventory would have a net selling price of $17,100 with costs to complete and sell of $600. The same inventory on that date would cost Richards $16,250. Richards assumes a normal profit margin of 10% on all sales. Required:
1) Prepare the journal entry for the inventory acquisition.
2) Determine the lower of cost or market value for the inventory.
3) Prepare the year-end journal entry for the inventory.
4) If richards used IFRS, determine the lower of cost or Net realizable value of inventory.
5) Prepare the year end journal entry for the inventory under IFRS