Question - During the 2013 audit of Namtip Ltd. you have tested the internal controls over inventory, observed the physical inventory taken on December 31, 2013, and performed various follow-up procedures related to the physical. Now you are performing costing (pricing) tests on a sample of the ending inventory. One of the items you selected for cost (price) testing is orange widget, a significant part in the manufacture of Namtip's main products. You noted that the 12/31/13 inventory record of orange widgets consisted of 1,263 units (you previously verified that this agreed to the quantity indicated from the physical inventory) at $782 each for a total of $987,666.
Required (consider each part independently):
A. When you look at the invoices for the November and December purchases of the orange widgets, you see the following:
Date Quantity Price Total
11/03/13 1,000 $765 $ 765,000
11/22/13 500 770 385,000
12/03/13 800 777 621,600
12/28/13 600 782 469,200
Prepare the adjusting entry, in proper form without an explanation, for the proper cost of orange widgets at December 31, 2013, assuming Namtip Ltd. Uses.