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. Describe about accounting. Why is it called language of business? Accounting is known as -an art of recording, classifying and summarizing transactions and events in a si

Q. What is Gross selling price? When a sale is on account it credits the Sales account as well as debits Accounts Receivable. The following entry records a USD 20000 sale on ac

Q. Choosing an accounting career? How companies have a choice in inventory cost methods among specific identification, LIFO, FIFO and weighted-average. Likewise one of the grea

A firm's __________ account is categorized as a current asset. A. equipment B. accounts payable C. bonds payable D. merchandise inventory

At the starting of the year, Hernandez Company had total assets of $872,310 and total liabilities of $497,500. (a) If total assets enhanced $147,320 during the year and total li

These questions are based on the following information and should be viewed as independent situations. Popper Co. acquired 80% of the common stock of Cocker Co. on January 1, 200


current and non current liabilties

Your individual coursework portfolio addresses the following learning outcomes: ? Discuss the corporate governance issues and the duty of care of the directors of limited companies