Question

	Determine the Correct Inventory Balance base on the data below:
		Cost	NRV
	Light Roast	100,000	125,000
	Medium Roast	150,000	145,000
	Dark Roast	150,000	160,000
	Premium Roast	50,000	35,000
	Total	450,000	465,000
	Provide the adjusting Journal Entry if necessary

Answer 1

Correct Answer:

	A	B	C =MIN(A,B)
Description	Cost	Net Realizable Value	Lower of Cost or NRV
Light Roast	$                             1,00,000.00	$           1,25,000.00	$     1,00,000.00
Medium boat	$                             1,50,000.00	$           1,45,000.00	$     1,45,000.00
Dark roast	$                             1,50,000.00	$           1,60,000.00	$     1,50,000.00
Premium boat	$                                 50,000.00	$               35,000.00	$        35,000.00
Total	$                             450,000.00	$           4,65,000.00	$                      430,000.00

Adjusting Entry:

Adjusting amount = Total Cost – Total lower of cost or NRV

= 450,000 – 430,000 = 20,000

Date	General Journal	Debit	Credit
.xx/xx/xx	Cost of Goods sold	$ 20,000
	Merchandise inventory		$               20,000

End of Answer.

Thanks