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In: Accounting

LCNRV and LCM a. As of 12-31-18, Zena Company has four different inventory items on hand....

LCNRV and LCM

a. As of 12-31-18, Zena Company has four different inventory items on hand. Data on the four items follows:

Item

Quantity on hand

Unit cost

Expected selling price

Estimated disposal costs

C3Z22P3

400

$30

$80

$7

PQ27845

100

$52

$55

$5

ZT15577

250

$27

$40

$0

SF98888

300

$13

$30

$9

Using the lower-of-cost-or-net realizable value approach applied on an individual-item basis, determine if Zena needs to make an entry to write her inventory down. If so, prepare the entry Zena should make.

b. As of 12-31-18, Bartle Company has four different inventory items on hand. Data on the four items follows:

Item

Quantity

on hand

Unit

cost

Expected

selling price

Replacement

Cost

Normal gross profit % *

Estimated

disposal costs

C3Z22P3

550

$30

$40

$25

40

$2

PQ27845

175

$10

$20

$12

30

$1

ZT15577

250

$17

$30

$20

60

$0

SF98888

100

$43

$50

$44

50

$8

* the % is a % of the expected selling price

Assume Bartle uses a LIFO costing method. Using the lower-of-cost-or-market value approach applied on an individual-item basis, determine if Bartle needs to make an entry to write her inventory down. If so, prepare the entry Bartle should make.

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