In: Accounting
Determining Lower of Cost or Net Realizable Value (NRV)
Crane Company had the following inventory at December 31, 2017.
Unit Price | |||
---|---|---|---|
Quantity | Cost | NRV | |
Desks | |||
Model 9001 | 74 | $190 | $210 |
Model 9002 | 49 | 280 | 268 |
Model 9003 | 24 | 350 | 360 |
Cabinets | |||
Model 7001 | 124 | 60 | 64 |
Model 7002 | 84 | 95 | 88 |
Model 7003 | 54 | 130 | 126 |
a. Determine the ending inventory amount by applying the net
realizable value rule to:
1. Each item of inventory.
$Answer
2. Each major category of inventory.
$Answer
3. Total inventory.
$Answer
Requirement A1
Answer----------$57,228
Quantity | Cost per unit | NRV per unit | Total cost | Total NRV | Lower of cost or NRV applied on each item | |
Desks | ||||||
Model 9001 | 74 | $ 190.00 | $ 210.00 | $ 14,060.00 | $ 15,540.00 | $ 14,060.00 |
Model 9002 | 49 | $ 280.00 | $ 268.00 | $ 13,720.00 | $ 13,132.00 | $ 13,132.00 |
Model 9003 | 24 | $ 350.00 | $ 360.00 | $ 8,400.00 | $ 8,640.00 | $ 8,400.00 |
Cabinets | ||||||
Model 7001 | 124 | $ 60.00 | $ 64.00 | $ 7,440.00 | $ 7,936.00 | $ 7,440.00 |
Model 7002 | 84 | $ 95.00 | $ 88.00 | $ 7,980.00 | $ 7,392.00 | $ 7,392.00 |
Model 7003 | 54 | $ 130.00 | $ 126.00 | $ 7,020.00 | $ 6,804.00 | $ 6,804.00 |
Total | $ 57,228.00 |
.
Requirement A2
Answer-----------$58,312
Working
Quantity | Cost per unit | NRV per unit | Total cost | Total NRV | Lower of cost or NRV applied on each category | |
Desks | ||||||
Model 9001 | 74 | $ 190.00 | $ 210.00 | $ 14,060.00 | $ 15,540.00 | |
Model 9002 | 49 | $ 280.00 | $ 268.00 | $ 13,720.00 | $ 13,132.00 | |
Model 9003 | 24 | $ 350.00 | $ 360.00 | $ 8,400.00 | $ 8,640.00 | |
Cabinets | $ 36,180.00 | $ 37,312.00 | $ 36,180.00 | |||
Model 7001 | 124 | $ 60.00 | $ 64.00 | $ 7,440.00 | $ 7,936.00 | |
Model 7002 | 84 | $ 95.00 | $ 88.00 | $ 7,980.00 | $ 7,392.00 | |
Model 7003 | 54 | $ 130.00 | $ 126.00 | $ 7,020.00 | $ 6,804.00 | |
Total | $ 22,440.00 | $ 22,132.00 | $ 22,132.00 | |||
$ 58,312.00 |
.
Requirement A3
Answer---------$58,620
Working
Quantity | Cost per unit | NRV per unit | Total cost | Total NRV | Lower of cost or NRV applied on Total inventory | |
Desks | ||||||
Model 9001 | 74 | $ 190.00 | $ 210.00 | $ 14,060.00 | $ 15,540.00 | |
Model 9002 | 49 | $ 280.00 | $ 268.00 | $ 13,720.00 | $ 13,132.00 | |
Model 9003 | 24 | $ 350.00 | $ 360.00 | $ 8,400.00 | $ 8,640.00 | |
Cabinets | ||||||
Model 7001 | 124 | $ 60.00 | $ 64.00 | $ 7,440.00 | $ 7,936.00 | |
Model 7002 | 84 | $ 95.00 | $ 88.00 | $ 7,980.00 | $ 7,392.00 | |
Model 7003 | 54 | $ 130.00 | $ 126.00 | $ 7,020.00 | $ 6,804.00 | |
Total | $ 58,620.00 | $ 59,444.00 | $ 58,620.00 |