nect.hem pter 6 Serial Probiem Serial Problem Business Solutions LO P2. A3 Santa

Question

nect.hem pter 6 Serial Probiem Serial Problem Business Solutions LO P2. A3 Santana Rey of Business Solutions is evaluating her inventory to determine whether R must be adjusted based on lower of cost or Pert A market rules. Business Solutions has three different types of softhivare in its eventory, and the tollowing nformation is avaiabie for 1. & 2. Compute the lower of cost or market for ending inventory assuming Rey applies the lower of cost or market ruie to inventory as whole and and lower of cost or markiet rule to each product i inveory Must Rey adjust the reponed inventory value Selected accouets and bslances for the treee months ended March 31 201 or Business Soluions tolow Compute inventoo

Explanation / Answer

Part A

Part B

Average inventory = (Beginning inventory + Ending inventory)/2 = ($0 + $2164)/2 = $1082

Note: The days' sales in inventory is rounded to 2 decimal places.

Per Unit LCM Applied to Items Inventory Items Units Cost Market Total Cost Total Market Office productivity 8 81 79 648 632 632 Desktop publishing 7 108 105 756 735 735 Accounting 8 95 101 760 808 760 Totals 2164 2175 2127 Lower of cost or market rule to inventory as a whole 2164 Rey must adjust the reported inventory value No Lower of cost or market rule to each product in inventory 2127 Rey must adjust the reported inventory value Yes

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