1.Calculate the final inventory value for RAC Corp based on individual inventory
ID: 2452013 • Letter: 1
Question
1.Calculate the final inventory value for RAC Corp based on individual inventory items.
2. Record the journal entry to write-down inventory assuming the allowance method is used.
RAC Corp sells refrigerators and dishwashers. Information related to the inventory of RAC Corp is provided belotw Net Realizable Value Less a Net Replacement Realizable Normal Profit Value Cost Cost Margin erator Models Elite Standard Economy 0,000 70,000 100,000 110,000 75,000 80.000 100,000 90,000 60,000 70,000 80,000 90,000 Dishwasher Model Pro Residential 95,000 150,000 140,000 85,000 170,000 92,000 155,000 80,000Explanation / Answer
RAC Corp Inventory valuation Refrigerator Model Cost Replacement Cost Net Realizable Value Net Realizable Value less normal profit margin Value to be considered as closing value Write down required Elite 80,000 70,000 80,000 60,000 70,000 10,000 Standard 100,000 110,000 100,000 70,000 70,000 30,000 Economy 90,000 75,000 90,000 80,000 80,000 10,000 Final inventory Refrigerator 220,000 50,000 Diswashers Pro 150,000 140,000 170,000 155,000 150,000 - Residential 95,000 85,000 92,000 80,000 85,000 10,000 Final Inventory value dish washer 235,000 10,000 Total Inventory value 455,000 60,000 Write Down -Refrigerator 50,000 Wrte Down dishwasher 10,000 Total write down 60,000 JV entry inventory write down on allowance basis Account Dr $ Cr $ Loss on Inventory write down 60,000 Accowance for obsolete Inventory 60,000
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