Question
Problem 9-1 (Algo) Lower of cost or net realizable value; by product and by total inventory...
Problem 9-1 (Algo) Lower of cost or net realizable value; by product and by total inventory [LO9-1] Decker Company has five products in its inventory. Information about the December 31, 2021, inventory follows. Product Quantity Unit Cost Unit Selling Price A 1,300 $ 16 $ 22 B 1,100 21 24 C 900 3 8 D 500 7 6 E 900 20 19 The cost to sell for each product consists of a 10 percent sales commission.
Required:
1. Determine the carrying value of inventory at December 31, 2021, assuming the lower of cost or net realizable value (LCNRV) rule is applied to individual products.
2. Determine the carrying value of inventory at December 31, 2021, assuming the LCNRV rule is applied to the entire inventory.
3. Assuming inventory write-downs are common for Decker, record any necessary year-end adjusting entry based on the amount calculated in requirement 2.
Homework Answers
Answer #1
Solution 1.
Carrying Value of Inventory lower of cost or NRV
Solution 2.
Carrying Value of Inventory Assuming the LCNRV rule is applied to the entire inventory
Solution 3.
No entry required as there was no written down in requirement 2.
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