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The following costs pertain to Den Co.'s purchase of inventory:
What amount should Den record as the cost of inventory as a
result of this purchase?
Question 18
Loft Co. reviewed its inventory values for proper pricing at year-
end. The following summarizes two inventory items examined for
the lower of cost or market: What amount should Loft include in
inventory at year-end, if it uses the total of the inventory to apply
the lower of cost or market?
Question 19
On January 1, 2004, Card Corp. signed a three-year,
noncancelable purchase contract, which allows Card to purchase
up to 500,000 units of a computer part annually from Hart
Supply Co. at $.10 per unit and guarantees a minimum annual
purchase of 100,000 units. During 2004, the part unexpectedly
became obsolete. Card had 250,000 units of this inventory at
December 31, 2004 and believes these parts can be sold as scrap
for $.02 per unit. What amount of probable loss from the
purchase commitment should Card report in its 2004 income
statement?
Question 20
Mill Co.'s allowance for uncollectible accounts was $100,000 at
the end of 2005 and $90,000 at the end of 2004. For the year
ended December 31, 2005, Mill reported bad debt expense of
$16,000 in its income statement. What amount did Mill debit to
the appropriate account in 2005 to write off actual bad debts?
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