Question

In: Accounting

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 800 $ 13 $ 15 $ 19
B 600 18 14 21
C 500 6 5 11
D 900 10 7 9
E 600 17 15 16


The cost to sell for each product consists of a 20 percent sales commission. The normal profit for each product is 30 percent of the selling price.

Required:
1. Determine the carrying value of inventory at December 31, 2021, assuming the lower of cost or market (LCM) rule is applied to individual products.

Determine the carrying value of inventory at December 31, 2021, assuming the lower of cost or market (LCM) rule is applied to individual products. (Do not round intermediate calculations.)

Product (units) RC NRV NRV-NP Market Cost Inventory carrying value
A (800) $12,000
B (600) 8,400
C (500) 2,500
D (900) 6,300
E (600) 9,000
Total $0 $0 $0

Solutions

Expert Solution

Solution:
CALCULATION OF INVENTORY VALUE AS PER LOWER OF COST OR NET REALIZABLE VALUE
PRODUCT Quantity (A) Purchase Cost Per Unit Net Realizable Value Cost of Ivnentory lower of Cost or Net Realizable Value (B) Inventory Carrying Value (AXB)
A 800 $                 13.00 $                        15.00 $                              13.00 $          10,400
B 600 $                 18.00 $                        14.00 $                              14.00 $            8,400
C 500 $                   6.00 $                           5.00 $                                5.00 $            2,500
D 900 $                 10.00 $                           7.00 $                                7.00 $            6,300
E 600 $                 17.00 $                        15.00 $                              15.00 $            9,000
Total   $          36,600

Related Solutions

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 The cost to sell for each product consists of a 10 percent sales commission. The normal profit for each product is 40 percent of the selling...
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 900 $ 25 $ 27 $ 31 B 900 30 26 33 C 500 18 17 23 D 700 22 19 21 E 500 29 27 28 The cost to sell for each product consists of a 10 percent sales commission. The normal profit for each product is 35 percent of the selling...
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 800 $ 13 $ 15 $ 19 B 600 18 14 21 C 500 6 5 11 D 900 10 7 9 E 600 17 15 16 The cost to sell for each product consists of a 20 percent sales commission. The normal profit for each product is 30 percent of the selling...
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, 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 $ 16 $ 18 $ 22 B 1,000 21 17 24 C 900 9 8 14 D 1,000 13 10 12 E 900 20 18 19 The cost to sell for each product consists of a 10 percent sales commission. The normal profit percentage for each product is 40 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 600 $ 12 $ 14 $ 18 B 1,000 17 13 20 C 600 5 4 10 D 600 9 6 8 E 600 16 14 15 The cost to sell for each product consists of a 10 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, 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 $ 26 $ 28 $ 32 B 500 31 27 34 C 900 19 18 24 D 900 23 20 22 E 800 30 28 29 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...
Decker Company has five products in its inventory. Information about the December 31, 2021, inventory follows....
Decker Company has five products in its inventory. Information about the December 31, 2021, inventory follows. Product Quantity Unit Cost Unit Selling Price A 1,300 $ 26 $ 32 B 1,100 31 34 C 1,000 4 8 D 600 7 6 E 1,000 30 29 The cost to sell for each product consists of a 10 percent sales commission. Required: 1. Determine the carrying value of inventory at December 31, 2021, assuming the lower of cost or net realizable value...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT