During 2020, Bridgeport Furniture Limited purchased a railway
carload of wicker chairs. The manufacturer of the chairs sold them
to Bridgeport for a lump sum of $58,600, because it was
discontinuing manufacturing operations and wanted to dispose of its
entire stock. Three types of chairs are included in the carload.
The three types and the estimated selling price for each are as
follows:
Type | No. of Chairs | Estimated Selling Price per Chair |
||||
Lounge chairs | 500 | $95 | ||||
Straight chairs | 690 | 55 | ||||
Armchairs | 380 | 85 |
Bridgeport estimates that the costs to sell this inventory would be
$6 per chair. During 2020, Bridgeport sells 420 lounge chairs, 290
armchairs, and 170 straight chairs, all at the same prices as
estimated. At December 31, 2020, the remaining chairs were put on
sale: the lounge chairs at 25% off the regular price, the armchairs
at 30% off, and the straight chairs at 40% off. All were expected
to be sold at these prices.
What is the total cost of the chairs remaining in inventory at the end of 2020, using the relative sales value method? (Round percentages to 1 decimal place, e.g. 52.7% and all other amounts to 2 decimal places, e.g. 52.75.)
What is the net realizable value of the chairs remaining in inventory? (Round answer to 2 decimal places, e.g. 52.75.)
What is the appropriate inventory value to be reported on the
December 31, 2020 statement of financial position, assuming the
lower of cost and NRV is applied on an individual item basis?
(Round answer to 2 decimal places, e.g.
52.75.)
Answer:
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