Treating Initial Work in Process Inventory under FIFO Method

FIFO Method of Treating Initial Work in Process Inventory ; Units Lost at End of Process. In the process of verifying the pricing of the company's inventory of work in process and finished goods recorded on the company's books, the auditor finds
Finished goods inventory, 1 10,000 units                       $504,900
Work in process inventory, 90,000 units, 50% completed  330,480

The company follows the practice of pricing the above inventories at the lower of cost or market on a first-in, first-out method. Materials are added to the production line at the start of the process, and overhead is applied to the product at the rate of 75% based on direct labor dollars. The auditor also learns that the market value of the finished goods inventory and the work in process inventory is greater than the amounts shown above, with the exception of the defective units in the ending inventory of finished goods, the market value of which amounts to $1.00 per unit. The difference between the market value and the assigned cost is expensed. 

A review of the company's cost record shows :
                                                                               Units      Materials    Labor
Opening inventory, January 1, 19—, 80% completed. 100,000   $100,000   $160,000
Additional units started in 19—                                 500,000
Materials costs incurred                                                           550,000
Labor costs incurred                                                                               997,500
                                                                               Units      Materials    Labor
Units completed in 19—:
Good units                                                           500,000
Defective units                                                       10,000

Finished goods inventory at December 31, 19—, includes 10,000 defective units.
Defective units occur at the end of the process; i.e., units are found to be defective at the point of final inspection.

Required: (1) Schedules indicating:
(a) Effective or equivalent production.
(b) Unit costs of materials, labor, and factory overhead of current period production.
(c) Costing of inventories of finished goods, defective units, and work in process.
(2) The necessary journal entry(ies), if any, to state correctly inventory of finished goods and work in process.

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