Solution-Compute the lower of cost -or- net- realizable

Compute the lower of cost -or- net- realizable value

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Reference no: EM132466283

The inventory of royal decking consisted of six products. The inventory of royal decking has developed the following data in order to calculate the lower of cost or net realizable value for its products. The products are listed individually (in thousands)

Products	Selling Price	Cost	Replacement Cost
A	190	105	90
II	240	170	160
C	280	185	180
D	365	345	330
E	190	145	133
F	240	175	180

The disposal costs are 20% of the selling price and the normal profit margin on all product is 30% of the selling price.

Required:

Question a. Compute the lower of cost -or- net- realizable value by individual item classification, and in total.

Question b. Prepare the journal entry to adjust inventory using total inventory approach.

Reference no: EM132466283

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Compute the lower of cost -or- net- realizable value

Reference no: EM132466283

Reference no: EM132466283

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