Almaden Hardware Store sells two product categories, tools and paint products. I

Question

Almaden Hardware Store sells two product categories, tools and paint products. Information pertaining to its 2018 year-end inventory is as follows: Net Inventory by Product Category Tools: Per Unit Realizable Quantity Cost Value Hammers Saws Screwdrivers 110 300 400 6.00 11.00 $6.50 10.00 3.60 3.00 Paint productS 1-gallon cans Paint brushes 600 110 7.00 5.00 6.00 5.50 Required 1. Determine the carrying value of inventory at year-end, assuming the lower of cost or net realizable value (LCNRV) rule is applied to (a) individual products, (b) product categories, and (c) total inventory 2. Assuming that the company reports an inventory write-down as a line item in the income statement, for each of the LCNRV applications determine the amount of the loss

Explanation / Answer

Lower of Cost and NRV By By By Product Cost NRV Individual Product Type Total Inventory Tools: hammers 660 715 660 saws 3300 3,000 3000 Screwdrivers 1200 1,440 1200 Total Tools 5160 5155 4860 5155 Paint product: 1-gallon cans 4200 3600 3600 paint Brushes 550 605 550 Total Paint 4750 4205 4150 4205 Total    9910 9360 9010 9360 9360 Inventory write downs = Total cost- Inventory valuation By Individual product (9910-9010) 900 By Product Type (9910-9360) 550 By Ttotal Inventory (9910-9360) 550

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