Question
In: Accounting
Exercise 9-7 Sarasota Company follows the practice of pricing its inventory at the lower-of-cost-or-market, on an...
Exercise 9-7
Sarasota Company follows the practice of pricing its inventory at the lower-of-cost-or-market, on an individual-item basis.
| Item No. | Quantity | Cost per Unit | Cost to Replace | Estimated Selling Price | Cost of Completion and Disposal | Normal Profit | ||||||||||||
| 1320 | 1,500 | $3.39 | $3.18 | $4.77 | $0.37 | $1.33 | ||||||||||||
| 1333 | 1,200 | 2.86 | 2.44 | 3.71 | 0.53 | 0.53 | ||||||||||||
| 1426 | 1,100 | 4.77 | 3.92 | 5.3 | 0.42 | 1.06 | ||||||||||||
| 1437 | 1,300 | 3.82 | 3.29 | 3.39 | 0.27 | 0.95 | ||||||||||||
| 1510 | 1,000 | 2.39 | 2.12 | 3.45 | 0.85 | 0.64 | ||||||||||||
| 1522 | 800 | 3.18 | 2.86 | 4.03 | 0.42 | 0.53 | ||||||||||||
| 1573 | 3,300 | 1.91 | 1.7 | 2.65 | 0.8 | 0.53 | ||||||||||||
| 1626 | 1,300 | 4.98 | 5.51 | 6.36 | 0.53 |
1.06 |
||||||||||||
From the information above, determine the amount of Sarasota
Company inventory.
| The amount of Sarasota Company’s inventory |
Solutions
Expert Solution
**If current replacement cost is between Ceiling(NRV) and floor value(NRV-normal profit) ,Market value = current replacement cost
**If current replacement cost is Higher than Ceiling ,Market value = Ceiling value(NRV)
**If current replacement cost is lower than floor value ,Market value = Floor value (NRV -normal profit)
| Item | NRV (Selling price - cost of disposal) [Ceiling value] | Current replacement cost | Floor value = NRV-normal profit | Market | Cost | Lower of cost or market (A) | units (B) | Total cost of inventory (A*B) |
| 1320 | 4.40 | 3.18 | 3.07 | 3.18 | 3.39 | 3.18 | 1500 | 4,770.00 |
| 1333 | 3.18 | 2.44 | 2.65 | 2.65 | 2.86 | 2.65 | 1200 | 3,180.00 |
| 1426 | 4.88 | 3.92 | 3.82 | 3.92 | 4.77 | 3.92 | 1100 | 4,312.00 |
| 1437 | 3.12 | 3.29 | 2.17 | 3.12 | 3.82 | 3.12 | 1300 | 4,056.00 |
| 1510 | 2.60 | 2.12 | 1.96 | 2.12 | 2.39 | 2.12 | 1000 | 2,120.00 |
| 1522 | 3.61 | 2.86 | 3.08 | 3.08 | 3.18 | 3.08 | 800 | 2,464.00 |
| 1573 | 1.85 | 1.7 | 1.32 | 1.7 | 1.91 | 1.7 | 3300 | 5,610.00 |
| 1626 | 5.83 | 5.51 | 4.77 | 5.51 | 4.98 | 4.98 | 1300 | 6,474.00 |
| Total | 32,986.00 |
Calculations and formuals are shown in the table below:
| Item | NRV (Selling price - cost of disposal) [Ceiling value] | Current replacement cost | Floor value = NRV-normal profit | Market | Cost | Lower of cost or market (A) | units (B) | Total cost of inventory (A*B) |
| 1320 | =4.77-0.37 | 3.18 | =B2-1.33 | 3.18 | =3.39 | =MIN(E2,F2) | 1500 | =G2*H2 |
| 1333 | =3.71-0.53 | 2.44 | =B3-0.53 | =D3 | 2.86 | =MIN(E3,F3) | 1200 | =G3*H3 |
| 1426 | =5.3-0.42 | 3.92 | =B4-1.06 | 3.92 | 4.77 | =MIN(E4,F4) | 1100 | =G4*H4 |
| 1437 | =3.39-0.27 | 3.29 | =B5-0.95 | 3.12 | 3.82 | =MIN(E5,F5) | 1300 | =G5*H5 |
| 1510 | =3.45-0.85 | 2.12 | =B6-0.64 | 2.12 | 2.39 | =MIN(E6,F6) | 1000 | =G6*H6 |
| 1522 | =4.03-0.42 | 2.86 | =B7-0.53 | =D7 | 3.18 | =MIN(E7,F7) | 800 | =G7*H7 |
| 1573 | =2.65-0.8 | 1.7 | =B8-0.53 | 1.7 | 1.91 | =MIN(E8,F8) | 3300 | =G8*H8 |
| 1626 | =6.36-0.53 | 5.51 | =B9-1.06 | 5.51 | 4.98 | =MIN(E9,F9) | 1300 | =G9*H9 |
| Total | =SUM(I2:I9) |
ekkarill92 answered 1 year agoRelated Solutions
Exercise 9-7 Ayayai Company follows the practice of pricing its inventory at the lower-of-cost-or-market, on an...
Exercise 9-7 Ayayai Company follows the practice of pricing its
inventory at the lower-of-cost-or-market, on an individual-item
basis.
item No.
Quantity
Cost per Unit
Cost to Replace
Estimated Selling Price
Cost of Completion and Disposal
Normal Profit
1320
1,400
$3.30
$3.09
$4.64
$0.36
$1.29
1333
1,100
2.78
2.37
3.61
0.52
0.52
1426
1,000
4.64
3.81
5.15
0.41
1.03
1437
1,200
3.71
3.19
3.30
0.26
0.93
1510
900
2.32
2.06
3.35
0.82
0.62
1522
700
3.09
2.78
3.91
0.41
0.52
1573...
Exercise 9-07 Windsor Company follows the practice of pricing its inventory at the lower-of-cost-or-market, on an...
Exercise 9-07
Windsor Company follows the practice of pricing its inventory at
the lower-of-cost-or-market, on an individual-item basis.
Item No.
Quantity
Cost per Unit
Cost to Replace
Estimated Selling Price
Cost of Completion and Disposal
Normal Profit
1320
1,600
$3.46
$3.24
$4.86
$0.38
$1.35
1333
1,300
2.92
2.48
3.78
0.54
0.54
1426
1,200
4.86
4.00
5.40
0.43
1.08
1437
1,400
3.89
3.35
3.46
0.27
0.97
1510
1,100
2.43
2.16
3.51
0.86
0.65
1522
900
3.24
2.92
4.10
0.43
0.54
1573...
Sarasota Company follows the practice of pricing its inventory at the lower-of-cost-or-market, on an individual-item basis....
Sarasota Company follows the practice of pricing its inventory
at the lower-of-cost-or-market, on an individual-item
basis.
Item No.
Quantity
Cost per Unit
Cost to Replace
Estimated Selling Price
Cost of Completion and Disposal
Normal Profit
1320
1,600
$3.42
$3.21
$4.82
$0.37
$1.34
1333
1,300
2.89
2.46
3.75
0.54
0.54
1426
1,200
4.82
3.96
5.35
0.43
1.07
1437
1,400
3.85
3.32
3.42
0.27
0.96
1510
1,100
2.41
2.14
3.48
0.86
0.64
1522
900
3.21
2.89
4.07
0.43
0.54
1573
3,400
1.93...
E9.7 (LO 2) (Lower-of-Cost-or-Market) Wangerin Company follows the practice of pricing its inventory at the lower‐of‐cost‐or‐market,...
E9.7 (LO 2)
(Lower-of-Cost-or-Market) Wangerin Company follows
the practice of pricing its inventory at the
lower‐of‐cost‐or‐market, on an individual-item basis.
Item No.
Quantity
Cost per Unit
Cost to Replace
Estimated Selling Price
Cost of Completion and Disposal
Normal Profit
1320
1,200
$3.20
$3.00
$4.50
$0.35
$1.25
1333
900
2.70
2.30
3.50
0.50
0.50
1426
800
4.50
3.70
5.00
0.40
1.00
1437
1,000
3.60
3.10
3.20
0.25
0.90
1510
700
2.25
2.00
3.25
0.80
0.60
1522
500
3.00
2.70
3.80
0.40...
Blue Company follows the practice of pricing its inventory at the lower-of-cost-or-market, on an individual-item basis....
Blue Company follows the practice of pricing its inventory at
the lower-of-cost-or-market, on an individual-item basis.
Item No.
Quantity
Cost per Unit
Cost to Replace
Estimated Selling Price
Cost of Completion and Disposal
Normal Profit
1320
1,300
$3.23
$3.03
$4.55
$0.35
$1.26
1333
1,000
2.73
2.32
3.54
0.51
0.51
1426
900
4.55
3.74
5.05
0.40
1.01
1437
1,100
3.64
3.13
3.23
0.25
0.91
1510
800
2.27
2.02
3.28
0.81
0.61
1522
600
3.03
2.73
3.84
0.40
0.51
1573
3,100
1.82...
Martinez Company follows the practice of pricing its inventory at the lower-of-cost-or-market, on an individual-item basis....
Martinez Company follows the practice of pricing its inventory
at the lower-of-cost-or-market, on an individual-item
basis.
Item No.
Quantity
Cost per Unit
Cost to Replace
Estimated Selling Price
Cost of Completion and Disposal
Normal Profit
1320
1,600
$3.46
$3.24
$4.86
$0.38
$1.35
1333
1,300
2.92
2.48
3.78
0.54
0.54
1426
1,200
4.86
4.00
5.40
0.43
1.08
1437
1,400
3.89
3.35
3.46
0.27
0.97
1510
1,100
2.43
2.16
3.51
0.86
0.65
1522
900
3.24
2.92
4.10
0.43
0.54
1573
3,400
1.94...
Martinez Company follows the practice of pricing its inventory at the lower-of-cost-or-market, on an individual-item basis....
Martinez Company follows the practice of pricing its inventory
at the lower-of-cost-or-market, on an individual-item
basis.
Item No.
Quantity
Cost per Unit
Cost to Replace
Estimated Selling Price
Cost of Completion and Disposal
Normal Profit
1320
1,600
$3.46
$3.24
$4.86
$0.38
$1.35
1333
1,300
2.92
2.48
3.78
0.54
0.54
1426
1,200
4.86
4.00
5.40
0.43
1.08
1437
1,400
3.89
3.35
3.46
0.27
0.97
1510
1,100
2.43
2.16
3.51
0.86
0.65
1522
900
3.24
2.92
4.10
0.43
0.54
1573
3,400
1.94...
Skysong Company follows the practice of pricing its inventory at the lower-of-cost-or-market, on an individual-item basis....
Skysong Company follows the practice of pricing its inventory at
the lower-of-cost-or-market, on an individual-item basis.
Item No.
Quantity
Cost per Unit
Cost to Replace
Estimated Selling Price
Cost of Completion and Disposal
Normal Profit
1320
1,500
$3.39
$3.18
$4.77
$0.37
$1.33
1333
1,200
2.86
2.44
3.71
0.53
0.53
1426
1,100
4.77
3.92
5.30
0.42
1.06
1437
1,300
3.82
3.29
3.39
0.27
0.95
1510
1,000
2.39
2.12
3.45
0.85
0.64
1522
800
3.18
2.86
4.03
0.42
0.53
1573
3,300
1.91...
Michael Bolton Company follows the practice of pricing its inventory at the lower-of-cost-or-market, on an individual-item...
Michael Bolton Company follows the practice of pricing its
inventory at the lower-of-cost-or-market, on an individual-item
basis
Item No.
Quantity
Cost per Unit
Cost to Replace
Estimated Selling Price
Cost of Completion and Disposal
Normal Profit
1320
1700
5.98
5.61
8.42
0.65
2.34
1333
1400
5.05
4.30
6.55
0.94
0.94
1426
1300
8.42
6.92
9.35
0.75
1.87
From the information above, determine the amount of Bolton
Company inventory.
Swifty Company follows the practice of pricing its inventory at the lower-of-cost-or-market, on an individual-item basis....
Swifty Company follows the practice of pricing its inventory at
the lower-of-cost-or-market, on an individual-item basis.
Item No.
Quantity
Cost per Unit
Cost to Replace
Estimated Selling Price
Cost of Completion and Disposal
Normal Profit
1320
1,400
$3.30
$3.09
$4.64
$0.36
$1.29
1333
1,100
2.78
2.37
3.61
0.52
0.52
1426
1,000
4.64
3.81
5.15
0.41
1.03
1437
1,200
3.71
3.19
3.30
0.26
0.93
1510
900
2.32
2.06
3.35
0.82
0.62
1522
700
3.09
2.78
3.91
0.41
0.52
1573
3,200
1.85...
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