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A company reports inventory using the lower of cost and net realizable value. See the following...

A company reports inventory using the lower of cost and net realizable value. See the following information related to its year-end inventory:
  

Inventory Quantity Cost NRV
Item A 150 $ 29 $ 34
Item B 50 34 24

  
a. Calculate ending inventory for the company under the lower of cost and net realizable value.

b. Record the necessary adjusting entry to inventory.

Solutions

Expert Solution

D A A*D B C=A or B C*D
Inventory Quantity Cost Cost of Inventory NRV Inventory Valuation Ending Inventory
Item A 150 29                      4,350.0 34 29                     4,350.0
Item B 50 34                      1,700.0 24 24                     1,200.0
                     6,050.0                     5,550.0
Cost of Inventory     6,050.0
Ending Inventory Valuation     5,550.0
Loss on Valuation         500.0
Loss on Valuation Dr.         500.0
To Inventory         500.0

ekkarill92 answered 1 year ago
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