Forest Company has five products in its inventory. Information about ending inventory follows. Unit Replacement Unit Selling Price Cost $16 $12 11 2 4 12 Product Quantity 1,000 A BUDE 800 600 200 600 Unit Cost 667774 $ 10 15 14 18 8 6 13 The cost to sell for each product consists of a 15 percent sales commission. The normal profit for each product is 40 percent of the selling price. Required: 1. Determine the carrying value of ending inventory, assuming the lower of cost or market (LCM) rule is applied to individual products. 2. Determine the carrying value of inventory, assuming the LCM rule is applied to the entire inventory. 3. Assuming inventory write-downs are common for Forest, record any necessary year-end adjusting entry based on the amount calculated in requirement 2.

Forest Company has five products in its inventory. Information about ending inventory follows. Unit Replacement Unit Selling Price Cost $16 $12 11 2 4 12 Product Quantity 1,000 A BUDE 800 600 200 600 Unit Cost 667774 $ 10 15 14 18 8 6 13 The cost to sell for each product consists of a 15 percent sales commission. The normal profit for each product is 40 percent of the selling price. Required: 1. Determine the carrying value of ending inventory, assuming the lower of cost or market (LCM) rule is applied to individual products. 2. Determine the carrying value of inventory, assuming the LCM rule is applied to the entire inventory. 3. Assuming inventory write-downs are common for Forest, record any necessary year-end adjusting entry based on the amount calculated in requirement 2.

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter8: Inventories: Special Valuation Issues

Section: Chapter Questions

Problem 2MC: Moore Company uses the LIFO cost flow assumption and carries Product A in inventory on December 31,...

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Moore Company uses the LIFO cost flow assumption and carries Product A in inventory on December 31, 2019, at its unit cost of 9.50. Because of a sharp decline in demand for the product, the selling price was reduced to 10.00 per unit. Moores normal profit margin on Product A is 2.00, disposal costs are 1.00 per unit, and the replacement cost is 6.50. Under the lower of cost or market rule, Moores December 31, 2019, inventory of Product A should be valued at a unit cost of: a. 6.50 b. 9.00 c. 7.00 d. 9.50
Forest Company has five products in its inventory. Information about ending inventory follows. Product Quantity Unit Cost A 1,000 B 800 с 600 D 200 E 600 $ 10 15 3 7 14 Unit Replacement Unit Selling Cost Price $ 16 18 8 6 13 $ 12 11 2 4 12 The cost to sell for each product consists of a 15 percent sales commission. The normal profit for each product is 40 percent of the selling price. Required: 1. Determine the carrying value of ending inventory, assuming the lower of cost or market (LCM) rule is applied to individual products. 2. Determine the carrying value of inventory, assuming the LCM rule is applied to the entire inventory. 3. Assuming inventory write-downs are common for Forest, record any necessary year-end adjusting entry based on the amount calculated in requirement 2.
Forest Company has five products in its inventory. Information about ending inventory follows. Product Quantity Unit Cost Unit Replacement Cost Unit Selling Price A 900 $ 19 $ 21 $ 25 B 800 24 20 27 C 1,000 12 11 17 D 500 16 13 15 E 800 23 21 22 The cost to sell for each product consists of a 15 percent sales commission. The normal profit for each product is 25 percent of the selling price. Required: Determine the carrying value of ending inventory, assuming the lower of cost or market (LCM) rule is applied to individual products. Determine the carrying value of inventory, assuming the LCM rule is applied to the entire inventory. Assuming inventory write-downs are common for Forest, record any necessary year-end adjusting entry based on the amount calculated in requirement 2.
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