Question

Data related to the inventories of Alpine Ski Equipment and Supplies is presented below:

	Skis				Boots				Apparel				Supplies
Selling price	$	164,000			$	159,000			$	103,000			$	68,000
Cost		144,000				141,000				72,100				47,600
Replacement cost		111,000				130,000				118,000				43,600
Sales commission		10	%			10	%			10	%			10	%

In applying the lower of cost or net realizable value rule, the inventory of apparel would be valued at:

Multiple Choice

• $95,320.

• $118,000.

• $72,100.

• $92,700.

Answer 1

Ans is $72,100

Working:-

	Skis	Boots	Apparel	Supplies
Selling price	1,64,000	1,59,000	1,03,000	68,000	a
Cost	1,44,000	1,41,000	72,100	47,600	b
Replacement cost	1,11,000	1,30,000	1,18,000	43,600	c
Sales commission	10%	10%	10%	10%	d
NRV(a-(a*d))	147600	143100	92700	61200	e
Cost( lower of e or f)	1,44,000	1,41,000	72,100	47,600	f
Value of inventory of Apparel			72,100

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