In: Accounting
Allegro Music sells musical equipment. A detailed list of allegro music is inventory follows;
Inventory item Number of units Cost per unit Total cost NRV per unit Total NRV LCNRV
Chime set 3 $750 $2250 $790 $2370
Cymbals 4 70 280 85 340
Drum sets 3 450 1350 525 1575
Flutes 5 650 3250 775 3875
Violins 3 1500 4500 1650 4950
Guitars 7 62 434 45 315
Guitars acoustic 9 125 1125 132 1188
Guitars electric 12 190 2280 225 2700
Key boards 4 2200 8800 2100 8400
Pianos entry 3 2300 6900 2500 7500
Pianos introductory 5 4500 22500 4900 24500
Pianos intermediate 2 12000 24000 14200 28400
Pianos professional 1 22500 22500 25000 25000
Pianos upright 2 5000 10000 7500 15000
Recorders 25 7 175 10 250
Saxophones 3 575 1725 675 2025
Triangles 5 55 275 65 325
Xylophones 4 245 980 300 1200
total $113324 $ 129913
NRV= Net realizable value
LCNRV= Lower of cost and net realizable value
Required:
complete the schedule above and prepare the year end adjusting entery to record the inventory at lower of cost and net realizable value.
Inventory items | Number of units | Cost per unit | Total Cost | NRV per unit | Total NRV | Lower of cost or NRV | Cost or NRV |
Chime set | 3 | 750 | 2250 | 790 | 2370 | 2250 | Cost |
Cymbals | 4 | 70 | 280 | 85 | 340 | 280 | Cost |
Drum sets | 3 | 450 | 1350 | 525 | 1575 | 1350 | Cost |
Flutes | 5 | 650 | 3250 | 775 | 3875 | 3250 | Cost |
Violins | 3 | 1500 | 4500 | 1650 | 4950 | 4500 | Cost |
Guitars | 7 | 62 | 434 | 45 | 315 | 315 | NRV |
Guitars acoustic | 9 | 125 | 1125 | 132 | 1188 | 1125 | Cost |
Guitars electric | 12 | 190 | 2280 | 225 | 2700 | 2280 | Cost |
Key boards | 4 | 2200 | 8800 | 2100 | 8400 | 8400 | NRV |
Pianos entry | 3 | 2300 | 6900 | 2500 | 7500 | 6900 | Cost |
Pianos introductory | 5 | 4500 | 22500 | 4900 | 24500 | 22500 | Cost |
Pianos intermediate | 2 | 12000 | 24000 | 14200 | 28400 | 24000 | Cost |
Pianos professional | 1 | 22500 | 22500 | 25000 | 25000 | 22500 | Cost |
Pianos upright | 2 | 5000 | 10000 | 7500 | 15000 | 10000 | Cost |
Recorders | 25 | 7 | 175 | 10 | 250 | 175 | Cost |
Saxophones | 3 | 575 | 1725 | 675 | 2025 | 1725 | Cost |
Triangles | 5 | 55 | 275 | 65 | 325 | 275 | Cost |
Xylophones | 4 | 245 | 980 | 300 | 1200 | 980 | Cost |
Total | $113,324 | $129,913 | |||||
Since there is decline in the value of Guitars and Key boards,hence we will written down the cost of these 2 to NRV | |||||||
Guitars | Cost- NRV = 434-315= 119 | 119 | |||||
Key boards | Cost- NRV = 8800-8400= 400 | 400 | |||||
519 | |||||||
Journal Entry | |||||||
General Joural | Debit $ | Credit $ | |||||
Cost of Goods Sold | 519 | ||||||
Inventory - Guitar | 119 | ||||||
Inventory - Key boards | 400 | ||||||