Question

In: Accounting

Blossom Inc. is a wholesaler of electronics. It purchased 1300 units of Product X for $700...

Blossom Inc. is a wholesaler of electronics. It purchased 1300 units of Product X for $700 each during 2022. The selling price during the year was $900 per unit. At year end, it had 200 units on hand and due to changes in technology, the selling price will have to be reduced by 35% in order to sell them. The value of each unit of Product X for the year-end inventory presentation should be

a) $315.

b) $700.

c) $585.

d) $900.

Solutions

Expert Solution

Ans: The correct option for the answer is option C i.e. $585

Inventory is valued on the basis of lower cost or Net Realizable value:

Cost Per unit= $700

Net Realizable Value= Selling Price per Unit- Reduction in Selling price per Unit

=> 900-(900*35%)

=> 900- 315

=> $585

As per Statement, Value of each unit of Product X for the year-end inventory presentation should be $585

ekkarill92 answered 2 years ago
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