Lower of cost or market inventory, Accounting Basics

Lower of Cost or Market Inventory

       
                 

Bob's Jewelry Company's inventory records indicates the following:

       
               

Normal

 

Quantity

Unit Cost

Replacement Cost

   

Profit

Item

On Hand

When Acquired

at Year-End

Selling Price

Margin

                 

Watches

100

$258

$269

$230

50

Rings

250

903

1,025

950

100

Bracelets

60

1,588

1,680

1,783

80

                 

Compute the total ending inventory value using the Lower of Cost or Market rule

       

applied to each item.

             
                 
                 
                 

Answer

               
 

Bob's Jewelry Company

       
                 

Item

Quantity on hand (a)

Cost per unit,$

Replacement cost per item, $

Lower of Cost / Replacement cost per unit, $ (b)

Total value (a*b), $

     
     

 

 

 

 

 

 

     

Watches

100

            258.00

            269.00

                               258.00

    25,800

     

Rings

250

            903.00

         1,025.00

                               903.00

  225,750

     

Bracelets

60

         1,588.00

         1,680.00

                            1,588.00

    95,280

     

 

 

 

 

 

  346,830

     
                 

Here market value is the replacement cost of inventories at year end. Accountants define replacement cost as market value.

     

 

 

 

Posted Date: 7/12/2012 3:23:56 AM | Location : United States







Related Discussions:- Lower of cost or market inventory, Assignment Help, Ask Question on Lower of cost or market inventory, Get Answer, Expert's Help, Lower of cost or market inventory Discussions

Write discussion on Lower of cost or market inventory
Your posts are moderated
Related Questions
Q. Example of work sheet for a merchandising company? Lyons Company is a tiny sporting goods firm. The illustration for Lyons Company focuses on merchandise-related accounts. T

The Olympic Company has an accounts receivable balance at December 31, 2010 of $159,548.00.  The existing balance in the Allowance for Uncollectible Accounts was a credit of $2,563

The Bayside Company uses the LIFO cost flow method to value inventory. In the current year, profit at Bayside is running unusually high. The corporate tax rate is also high this ye

Q. Measurement in financial statements? In December 1984 the FASB issued Statement of Financial Accounting Concepts No. 5 The Recognition and Measurement in Financial Statement

1. Fill in the table below.  Assume TC stands for Total Cost, TFC as Total Fixed Cost, TVC as Total Variable Cost, ATC as Average Total Cost, AFC as Average Fixed Cost, AVC as Aver

Q. What is Working capital? Working capital -- current assets minus current liabilities. In most businesses majorcomponents of working capital are cash, accounts receivable and

Honolulu Cookie Company provides the following information in order for you to prepare the company's bank reconciliation:                                    Balance per company

In Exhibit the accurately stated ending inventory for the year 2009 is USD 35000. As a result Allen has a gross margin of USD 135000 as well as net income of USD 50000. The stateme

Q. Define Expenses in terms of accounting? Expenses are outflows or else other using up of assets or incurrence of liabilities (or a combination of both) from rendering service

Q. Procedure of recording business transactions? The raw information of accounting is the business transactions. We documented the transactions in section 1 as increases or dec