Sandals Company is preparing the annual financial statements dated December 31.

Question

Sandals Company is preparing the annual financial statements dated December 31. Ending inventory information about the four major items stocked for regular sale follows:

Compute the amount that should be reported for the ending inventory using the LCM rule applied to each item.

How will the write-down of inventory to lower of cost or market affect the company’s expenses reported for the year ended December 31?

       

Sandals Company is preparing the annual financial statements dated December 31. Ending inventory information about the four major items stocked for regular sale follows:

Explanation / Answer

1) Compute the amount that should be reported for the ending inventory using the LCM rule applied to each item.

2) Journal entry :

Cost Market value Value under LCM Air flow 450 510 450 Blister buster 3060 2880 2880 Coolonite 2240 2080 2080 Dudesly 600 725 600 Total 6350 6195 6010

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