Question
In: Accounting
he inventory of Sandhill Company on December 31, 2020, consists of the following items. Part Quantity...
he inventory of Sandhill Company on December 31, 2020, consists
of the following items.
|
Part |
Quantity |
Cost per |
Net Realizable |
||||||
|---|---|---|---|---|---|---|---|---|---|
| A419 | 4,600 | $11 | $19 | ||||||
| A435 | 3,910 | 8 | 6 | ||||||
| A545 | 9,292 | 7 | 11 | ||||||
| A615 | 6,900 | 10 | 7 | ||||||
| A721 | 10,120 | 9 | 10 | ||||||
| A885 | 12,880 | 15 | 18 | ||||||
| A999 | a | 8,464 | 6 | 1 | |||||
a Part No. A999 is obsolete and has a realizable value
of $1 each as scrap.
(a) Determine the inventory as of December 31,
2020, by the LCNRV method, applying this method to each
item.
| Inventory as of December 31, 2020 | $enter the dollar amount of inventory at December 31, 2017 |
(b) Determine the inventory by the LCNRV method,
applying the method to the total of the inventory.
| Inventory as of December 31, 2020 | $enter the dollar amount of inventory at December 31, 2017 |
Solutions
Expert Solution
Answer-a)- The inventory as of December 31, 2020, by the LCNRV method, applying this method to each item = $480148.
Explanation-
| SANDHILL COMPANY | ||||||
| Calculation of closing inventory as of December31, 2020 for each item | ||||||
| By using Lower of cost or Net Realizable Vaue Method | Closing Inventory | |||||
| Part | Quantity (a) | Cost per unit | Net Reliazable value | Valued on | $ Per unit (b) | Amount $ (C=a*b) |
| $ | $ | |||||
| A419 | 4600 | 11 | 19 | Cost | 11 | 50600 |
| A435 | 3910 | 8 | 6 | Net Realizable value | 6 | 23460 |
| A545 | 9292 | 7 | 11 | Cost | 7 | 65044 |
| A615 | 6900 | 10 | 7 | Net Realizable value | 7 | 48300 |
| A721 | 10120 | 9 | 10 | Cost | 9 | 91080 |
| A885 | 12880 | 15 | 18 | Cost | 15 | 193200 |
| A999a | 8464 | 6 | 1 | Net Realizable value | 1 | 8464 |
| Total | 480148 |
b)- The inventory by the LCNRV method, applying the method to the total of the inventory = $490294.
Explanation-
| SANDHILL COMPANY | |||||
| Calculation of closing inventory as of December31, 2020 to total of the Inventory | |||||
| By using Lower of cost or Net Realizable Vaue Method | |||||
| Part | Quantity (a) | Cost per unit (b) | Net Reliazable value (c) | Total cost( d=a*b) | Total NRV (e=a*c) |
| $ | $ | ||||
| A419 | 4600 | 11 | 19 | 50600 | 87400 |
| A435 | 3910 | 8 | 6 | 31280 | 23460 |
| A545 | 9292 | 7 | 11 | 65044 | 102212 |
| A615 | 6900 | 10 | 7 | 69000 | 48300 |
| A721 | 10120 | 9 | 10 | 91080 | 101200 |
| A885 | 12880 | 15 | 18 | 193200 | 231840 |
| A999a | 8464 | 6 | 1 | 50784 | 8464 |
| Totals | 530025 | 490294 |
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