E7-11 Reporting Inventory at Lower of Cost or Market [LO 7-4] Sandals Company is

Question

E7-11 Reporting Inventory at Lower of Cost or Market [LO 7-4] Sandals Company is preparing the annual financial statements dated December 31. Ending inventory information about the four major items stocked for regular sale follows Unit Cost Market Value at Year-End $16 38 65 QuantityWhen on Hand Acquire(FIFO) Product Line Air Flow Blister Buster Coolonite Dudesly $14 40 70 28 40 85 30 Required 1. Compute the amount that should be reported for the ending inventory using the LCM rule applied to each itenm Ending Inventory 2. How will the write-down of inventory to lower of cost or market affect the company's expenses reported for the year ended December 31? Cost of goods sold will be by

Explanation / Answer

Product Quantity Unit cost Market value LCM Total cost Inventory value Air flow 40 14 16 14 560 560 Blister Buster 85 40 38 38 3400 3230 Coolonite 33 70 65 65 2310 2145 Dudesly 30 28 33 28 840 840 Total 7110 6775 Ending inventory = $6775 2 Cost of goods sold will be higher by $ 335 (7110-6775)

Related Questions

Navigate

• Browse (All)
• Browse E
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.