Question

   

Brooks Company carries three inventory items. The following information pertains to the ending inventory:

      

Item	Quantity	Unit Cost			Unit Market Value
A	220	$	11		$	10
F	235		12			11
K	170		5			8

  

Required

a.	Determine the ending inventory that Brooks will report on the balance sheet, assuming that it applies the lower-of-cost-or-market rule to individual inventory items.

ending inventory = ?

          

b.	Prepare the necessary journal entry, assuming the decline in value was immaterial. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

   

Event 1: record entry for cost of goods sold

Answer 1

a
Item	Quantity	Unit cost	Unit Market Value	Total cost	Total Market Value	Lower of Cost or Market
A	220	11	10	2420	2200	2200
F	235	12	11	2820	2585	2585
K	170	5	8	850	1360	850
			Total	6090	6145	5635
Ending inventory	5635
b
General Journal	Debit	Credit
Cost of goods sold	455		=6090-5635
Merchandise Inventory		455