Question

In: Accounting

Teal Mountain, Inc. values its inventory at the lower-of-LIFO-cost-or-market. The following information is available from the...

Teal Mountain, Inc. values its inventory at the lower-of-LIFO-cost-or-market. The following information is available from the company’s inventory records as of December 31, 2020.

Item

Quantity

Unit
Cost

Replacement
Cost/Unit

Estimated Selling
Price/Unit

Completion & Disposal
Cost/Unit

Normal Profit
Margin/Unit

X490 11,832 $14.50 $13.86 $16.24 $3.48 $3.94
X512 5,742 8.12 8.70 10.32 0.29 2.09
X682 20,880 22.04 21.58 36.60 3.77 10.44
Z195 14,500 16.53 16.24 22.97 1.62 6.67
Z846 9,976 13.92 14.79 16.18 2.44 1.28

(a)

Partially correct answer iconYour answer is partially correct.

Calculate the lower-of-cost-or-market using the individual-item approach. (Round answers to 2 decimal places, e.g. 52.75.)

Lower-of-Cost-or-Market
(Per unit basis)

X490

$enter a dollar amount

X512

$enter a dollar amount

X682

$enter a dollar amount

X195

$enter a dollar amount

X846

$enter a dollar amount

  

Attempts: 2 of 2 used

(b)

New attempt is in progress. Some of the new entries may impact the last attempt grading.Your answer is partially correct.

Show the journal entries Teal Mountain, Inc. will need to make in order to write down the ending inventory from cost to market. Assume this is Teal Mountain’s first year of operations. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Round answers to 0 decimal places, e.g. 5,275.)

Solutions

Expert Solution

Step :1 : calculation of NRV

  • NRV = Estimated Selling Price - Completion & Disposal Cost

  • for the purpose of calculation of market value excel formula of median is used to figure middle value of NRV, Estimated cost and replacement cost

(a)

Calculate the lower-of-cost-or-market using the individual-item approach.

(b)

Show the journal entries Teal Mountain, Inc. will need to make in order to write down the ending inventory from cost to market. Assume this is Teal Mountain’s first year of operations

Working :

...


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