Question

Almaden Hardware Store sells two product categories, tools and paint products. Information pertaining to its 2018 year-end inventory is as follows:

Inventory, by Product Category	Quantity			Per Unit Cost				Net Realizable Value
Tools:
Hammers	120			$	5.20			$	5.70
Saws	220				10.20				9.20
Screwdrivers	320				2.20				2.80
Paint products:
1-gallon cans	520				6.20				5.20
Paint brushes	120				4.20				4.70

Required:
1. Determine the carrying value of inventory at year-end, assuming the lower of cost or net realizable value (LCNRV) rule is applied to (a) individual products, (b) product categories, and (c) total inventory.
2. Assuming that the company reports an inventory write-down as a line item in the income statement, for each of the LCNRV applications determine the amount of the loss.

			Lower of cost and NRV
		Net	By	By
		Realizable	Individual	Product	By Total
Product	Cost	Value	Products	Type	Inventory
Tools:
Hammers
Saws
Screwdrivers
Total tools
Paint products:
1-gallon cans
Paint brushes
Total paint
Total

(a)Individual products

(b)Product categories

(c)Total inventory

Answer 1

Req 1:
				By Ind.	By Product	By Total
Product		Cost	NRV	Product	Type	Inventory
Tools:
Hammer		624	684	624
Saws		2244	2024	2024
Screwdrivers		704	896	704
Total Tools		3572	3604		3572
Paint Products:
1-Gallon Cans		3224	2704	2704
Paint Brushes		504	564	504
Total Paint		3728	3268		3268
Total		7300	6872	6560	6840	6872
Req 2:
		WRITE DOWNS
By Individual:		740	(7300-6560)
By product type:		460	(7300-6840)
By Total Inventory:		428	(7300-6872)