Jones Company is preparing the annual financial statements dated December 31 of

Question

Jones Company is preparing the annual financial statements dated December 31 of the current year. Ending inventory information about the five major items stocked for regular sale follows: ENDING INVENTORY, CURRENT YEAR Net Realizable Value (Market) at Year-End $ 12 Quantity on Hand Unit Cost When Acquired (FIFO) S 15 10 48 25 Required 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 CM Market Valuation 70 Total

Explanation / Answer

Item Quantity Total cost Total market LCM valuation A 50 (50*15)=750 (50*12)=600 600 B 80 (80*30)=2400 (80*40)=3200 2400 C 10 (10*48)=480 (10*52)=520 480 D 70 (70*25)=1750 (70*30)=2100 1750 E 350 (350*10)=3500 (350*5)=1750 1750 Total $8880 $8170 $6980

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