Question

In: Accounting

Allegro Music sells musical equipment. A detailed list of allegro music is inventory follows; Inventory item...

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.

Solutions

Expert Solution

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

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