9 8.00 points Parson Company was formed on January 1 of the current year and is

Question

9 8.00 points Parson Company was formed on January 1 of the current year and is preparing the annual financial statements dated December 31, current year. Ending inventory information about the four major items stocked for regular sale follows: ENDING INVENTORY, CURRENT YEAR Net Realizable Value (Market) at Year-End S 13 Quantity U on Hand Cost When Acquired (FIFO) S 18 47 43 35 Required 1. Compute the valuation that should be used for the current year ending inventory using the LCM rule applied on an item-by-item basis. Item Quantity Total Cost Market Valuation Total 2. What will be the effect of the write-down of inventory to lower of cost or market on cost of goods sold for the year ended December 31, current year? or t of goods sold by the amount of the write-down,

Explanation / Answer

Item Quantity Total cost Total market LCM valuation A 33 594 429 429 B 68 3196 2924 2924 C 48 2784 2880 2784 D 23 805 690 690 7379 6923 6827 2 The write down will increase cost of goods sold by $552 (7379-6827)

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