Question

The information pertains to Hagen Metal Work’s ending inventory for the current year: Unit Unit Item Quantity Cost Market Value C 210 $ 14 $ 13 D 200 16 13 K 60 12 14 M 47 9 13 Required a. Determine the value of the ending inventory using the lower-of-cost-or-market rule applied to (1) each individual inventory item and (2) the inventory in aggregate.

b. Prepare any necessary journal entries, assuming the decline in value is immaterial, using the (1) individual method and (2) aggregate method. Hagen Metal Works uses the perpetual inventory system. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Answer 1

a
	Ending inventory
Individual item method	6473
Aggregate method	6781
b
1
	Debit	Credit
Cost of goods sold	810		=7283-6473
Inventory		810
2
	Debit	Credit
Cost of goods sold	502		=7283-6781
Inventory		502
Workings:
Item	Quantity	Unit cost	Unit market value	Lower of cost or market value	Inventory value
C	210	14	13	13	2730
D	200	16	13	13	2600
K	60	12	14	12	720
M	47	9	13	9	423
					6473
Aggregate method:
Item	Quantity	Unit cost	Unit market value	Total cost	Total market
C	210	14	13	2940	2730
D	200	16	13	3200	2600
K	60	12	14	720	840
M	47	9	13	423	611
				7283	6781