It is December 31, the end of the year, and the controller of Martin Corporation

Question

It is December 31, the end of the year, and the controller of Martin Corporation is applying the lower-of-cost-or-market (LCM) rule to inventories. Before any year-end adjustments, Martin reports the following data:

t is December 31, the end of the year, and the controller of Martin Corporation is applying the lower-af-cost-or-market (LCM) rule to inventories. Before any year-end adjustments, Martin reports the tollowing data: 450,000 Cost af goods sold Historical cost of ending inventory as determined by a physical count 65,000 Martin determines that the current replacement cost of ending inventory is $48,000. Show what Martin should report for ending inventory and for cost of goods sold. Identify the financial statement where each item appears. Inventory vill be reported on the balance sheet Cost of goods sold wil be reported on the income statement at 48000 at s

Explanation / Answer

Inventory will be reported on the balance sheet at $48000

Cost of goods sold will be reported on the income statement at $467000

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