Question

In: Accounting

Lower-of-Cost-or-Market Inventory Data on the physical inventory of Katus Products Co. as of December 31 follows:...

Lower-of-Cost-or-Market Inventory

Data on the physical inventory of Katus Products Co. as of December 31 follows:

Inventory
Item
Inventory
Quantity
Market Value per Unit
(Net Realizable Value)
A54 37 $ 56
C77 24 178
F66 30 132
H83 21 545
K12 375 5
Q58 90 18
S36 8 235
V97 140 20
Y88 17 744

Quantity and cost data from the last purchases invoice of the year and the next-to-the-last purchases invoice are summarized as follows:

Last
Purchases Invoice
Next-to-the-Last
Purchases Invoice
Inventory
Item
Quantity
Purchased
Unit
Cost
Quantity
Purchased
Unit
Cost
A54 30 $ 60 40 $ 58
C77 25 174 15 180
F66 20 130 15 128
H83 6 547 15 540
K12 500 6 500 7
Q58 75 25 80 26
S36 5 256 4 260
V97 100 17 115 16
Y88 10 750 8 740

Required:

Determine the inventory at cost as well as at the lower of cost or market, using the first-in, first-out method. Record the appropriate unit costs on the inventory sheet, and complete the pricing of the inventory. When there are two different unit costs applicable to an item:

Insert the quantity and unit cost of the last purchase.

On the following line, insert the quantity and unit cost of the next-to-the-last purchase.

Total the cost and market columns and insert the lower of the two totals in the LCM column.

The first item on the inventory sheet has been completed as an example.

Inventory Sheet
December 31
Inventory
Item
Inventory
Quantity
Cost per
Unit
Market Value per Unit
(Net Realizable Value)
Total Cost Total Market Total LCM
A54 37 30 $60 $56 $1,800 $1,680
7 58 56 406 392
2,206 2,072 $2,072
C77 24 178
F66 30 132
132
H83 21 545
545
K12 375 5
Q58 90 18
18
S36 8 235
235
V97 140 20
20
Y88 17 744
744
Total $ $ $

Solutions

Expert Solution

  • All working forms part of the answer
  • Instructions to fill are already clear from question.
  • Under FIFO method, ending inventory is valued first from the latest purchases, and then further if required, from earlier purchases.
  • Answer as required

Inventory Sheet

Inventory

Inventory

Cost per

Market Value per Unit

Total Cost – (C) (Units x A)

Total Market (D) (Units x B)

Total LCM (Lower of C and D)

Item

Quantity

Unit (A)

(Net Realizable Value) (B)

A54

37

30

$             60.00

$            56.00

$          1,800.00

$        1,680.00

7

$             58.00

$            56.00

$             406.00

$           392.00

$          2,206.00

$        2,072.00

$    2,072.00

C77

24

24

$           174.00

$          178.00

$          4,176.00

$        4,272.00

$    4,176.00

F66

30

20

$           130.00

$          132.00

$          2,600.00

$        2,640.00

10

$           128.00

$          132.00

$          1,280.00

$        1,320.00

$          3,880.00

$        3,960.00

$    3,880.00

H83

21

6

$           547.00

$          545.00

$          3,282.00

$        3,270.00

15

$           540.00

$          545.00

$          8,100.00

$        8,175.00

$        11,382.00

$      11,445.00

$ 11,382.00

K12

375

375

$               6.00

$             5.00

$          2,250.00

$        1,875.00

$    1,875.00

Q58

90

75

$             25.00

$            18.00

$          1,875.00

$        1,350.00

15

$             26.00

$            18.00

$             390.00

$           270.00

$          2,265.00

$        1,620.00

$    1,620.00

S36

8

5

$           256.00

$          235.00

$          1,280.00

$        1,175.00

3

$           260.00

$          235.00

$             780.00

$           705.00

$          2,060.00

$        1,880.00

$    1,880.00

V97

140

100

$             17.00

$            20.00

$          1,700.00

$        2,000.00

40

$             16.00

$            20.00

$             640.00

$           800.00

$          2,340.00

$        2,800.00

$    2,340.00

Y88

17

10

$           750.00

$          744.00

$          7,500.00

$        7,440.00

7

$           740.00

$          744.00

$          5,180.00

$        5,208.00

$        12,680.00

$      12,648.00

$ 12,648.00

Total

$        43,239.00

$      42,572.00

$ 41,873.00


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