Question

Lower-of-Cost-or-Market Inventory

Data on the physical inventory of Ashwood Products Company as of December 31 follows:

Description	Inventory Quantity			Unit Market Price
B12	38			$ 57
E41	18			180
G19	33			126
L88	18			550
N94	400			7
P24	90			18
R66	8			250
T33	140			20
Z16	15			752

Quantity and cost data from the last purchases invoice of the year and the next-to-the-last purchases invoice are summarized as follows:

	Last Purchases Invoice							Next-to-the-Last Purchases Invoice
Description	Quantity Purchased			Unit Cost				Quantity Purchased			Unit Cost
B12	30			$ 60				30			$ 59
E41	35			178				20			180
G19	20			128				25			129
L88	10			563				10			560
N94	500			8				500			7
P24	80			22				50			21
R66	5			248				4			260
T33	100			21				100			19
Z16	10			750				9			745

Required:

Determine the inventory at cost and also at the lower of cost or market, using the first-in, first-out method. Record the appropriate unit costs on the inventory sheet, and complete the pricing of the inventory. When there are two different unit costs applicable to an item, proceed as follows:

Insert the quantity and unit cost of the last purchase.

On the following line, insert the quantity and unit cost of the next-to-the-last purchase.

Total the cost and market columns and insert the lower of the two totals in the LCM column.

The first item on the inventory sheet has been completed as an example.

Inventory Sheet December 31
Description	Inventory Quantity		Cost Price Unit	Market Value per Unit (Net Realizable Value)
					Cost	Market	LCM
B12	38	30	$60	$57	$1,800	$1,710
		8	59	57	472	456
					2,272	2,166	$2,166
E41	18
G19	33
L88	18
N94	400
P24	90
R66	8
T33	140
Z16	15
Total					$	$	$

Answer 1

Inventory Sheet
31-Dec
Description	Inventory Quantity		Cost Price Unit	Market Value
				per Unit
				(Net Realizable
				Value)	Cost	Market	LCM
B12	38	30	$60	$57	$1,800	$1,710
		8	59	57	472	456
					2,272	2,166	$2,166
E41	18	18	178	180	3204	3240	3204
G19	33	20	128	126	2560	2520
		13	129	126	1677	1638
					4237	4158	4158
L88	18	10	563	550	5630	5500
		8	560	550	4480	4400
					10110	9900	9900
N94	400	400	8	7	3200	2800	2800
P24	90	80	22	18	1760	1440
		10	21	18	210	180
					1970	1620	1620
R66	8	5	248	250	1240	1250
		3	260	250	780	750
					2020	2000	2000
T33	140	100	21	20	2100	2000
		40	19	20	760	800
					2860	2800	2800
Z16	15	10	750	752	7500	7520
		5	745	752	3725	3760
					11225	11280	11225
Total					41,098	39,964	39,873

Working notes for the above answer is as under