Question
In: Accounting
The December 31, 2020 inventory of Ivanhoe Company consisted of four products, for which certain information...
The December 31, 2020 inventory of Ivanhoe Company consisted of
four products, for which certain information is provided
below.
| Product | Original Cost | Replacement Cost |
Estimated Disposal Cost |
Expected Selling Price |
Normal Profit on Sales |
||||||||||
| A | $29.00 | $27.00 | $5.50 | $42.00 | 25.00% | ||||||||||
| B | $41.00 | $39.00 | $9.00 | $49.00 | 20.00% | ||||||||||
| C | $148.00 | $143.00 | $22.00 | $185.00 | 20.00% | ||||||||||
| D | $20.00 | $14.70 | $5.00 | $26.00 | 20.00% | ||||||||||
Using the lower-of-cost-or-market approach applied on an
individual-item basis, compute the inventory valuation that should
be reported for each product on December 31, 2020.
(Round answers to 2 decimal places, e.g.
52.75.)
| Product | ||
| A | $ | |
| B | $ | |
| C | $ | |
| D | $ |
Solutions
Expert Solution
Solution
| Product | |
| A | $ 27.38 |
| B | $ 39.00 |
| C | $ 143.00 |
| D | $ 16.80 |
Working
| Product | Cost | Replacement cost | NRV | NRV-NP | Market | Per unit Inventory Value |
| A | $ 29.00 | $ 27.00 | $ 36.50 | $ 27.38 | $ 27.38 | $ 27.38 |
| B | $ 41.00 | $ 39.00 | $ 40.00 | $ 32.00 | $ 39.00 | $ 39.00 |
| C | $ 148.00 | $ 143.00 | $ 163.00 | $ 130.40 | $ 143.00 | $ 143.00 |
| D | $ 20.00 | $ 14.70 | $ 21.00 | $ 16.80 | $ 16.80 | $ 16.80 |
.
| If we want to value inventory on the basis of lower of cost or market value then we have to first calculate market value. | ||||||
| To calculate market value an easy method is used in this question. We will take the middle value of the given below values to ascertain market value. | ||||||
| Replacement value | NRV | NRV minus Normal Profits |
ekkarill92 answered 10 months agoRelated Solutions
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Tatum Company has four products in its inventory. Information
about December 31, 2018, inventory is as follows:
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Tatum Company Product
Total Cost
Total Net Realizable Value
101
120,000.00
100,00.00
102
90,000.00
110,000.00
103
60,000.00
50,000.00
104
30,000.00
50,000.00
Assignment:
Determine the carrying value of inventory at December 31, 2018,
assuming the lower of cost or net realizable value (LCNRV) rule is
applied to individual products.
Assuming that inventory write-downs are common for Tatum
Company, record any necessary year-end...
Tatum Company has four products in its inventory. Information about the December 31, 2018, inventory is...
Tatum Company has four products in its inventory. Information
about the December 31, 2018, inventory is as follows: Product Total
Cost Total Net Realizable Value 101 $ 154,000 $ 117,000 102 111,000
127,000 103 77,000 67,000 104 47,000 67,000 Required: 1. Determine
the carrying value of inventory at December 31, 2018, assuming the
lower of cost or net realizable value (LCNRV) rule is applied to
individual products. 2. Assuming that inventory write-downs are
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The merchandise inventory in Ivanhoe Company was counted after
the close of business on December 31, 2021, the company’s year end.
It was determined that the total cost of this inventory was
$51,200. Ivanhoe wants to know if this is the correct amount that
should be reported on the company’s December 31, 2021, balance
sheet or if an adjustment needs to be made for any of the following
items:
(a)
The count included items costing $1,200 that had been sold...
Forester Company has five products in its inventory. Information about the December 31, 2018, inventory follows....
Forester Company has five products in its inventory. Information
about the December 31, 2018, inventory follows. Product Quantity
Unit Cost Unit Replacement Cost Unit Selling Price A 1,000 $ 28 $
30 $ 34 B 900 33 29 36 C 500 21 20 26 D 600 25 22 24 E 700 32 30 31
The cost to sell for each product consists of a 10 percent sales
commission. The normal profit percentage for each product is 35
percent of the...
Forester Company has five products in its inventory. Information about the December 31, 2018, inventory follows:...
Forester Company has five products in its inventory. Information
about the December 31, 2018, inventory follows:
product
quantity
unit cost
unit replacement cost
unit selling price
a
1000
$10
$12
$16
b
800
15
11
18
c
600
3
2
8
d
200
7
4
6
e
600
14
13
13
The cost to sell for each product consists of a 15 percent sales
commission. The normal profit percentage for each product is 40
percent of the selling price.
(1)...
Forester Company has five products in its inventory. Information about the December 31, 2018, inventory follows....
Forester Company has five products in its inventory. Information
about the December 31, 2018, inventory follows.
Product
Quantity
Unit
Cost
Unit
Replacement
Cost
Unit
Selling
Price
A
900
$
24
$
26
$
30
B
500
29
25
32
C
600
17
16
22
D
1,000
21
18
20
E
900
28
26
27
The cost to sell for each product consists of a 15 percent sales
commission. The normal profit percentage for each product is 25
percent of the...
Forester Company has five products in its inventory. Information about the December 31, 2021, inventory follows....
Forester Company has five products in its inventory. Information
about the December 31, 2021, inventory follows.
Product
Quantity
Unit
Cost
Unit
Replacement
Cost
Unit
Selling
Price
A
500
$
18
$
20
$
24
B
800
23
19
26
C
700
11
10
16
D
800
15
12
14
E
700
22
20
21
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Unit
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Unit
Selling
Price
A
1,300
$
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B
1,100
31
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C
1,000
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8
D
600
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6
E
1,000
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commission.
Required:
1. Determine the carrying value of inventory at
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