The inventory of 3T Company on December 31, 2014, consists of the following item

Question

The inventory of 3T Company on December 31, 2014, consists of the following items.

Part No.

Quantity

Cost per Unit

Cost to Replace per Unit

a Part No. 121 is obsolete and has a realizable value of $0.66 each as scrap.

(a) Determine the inventory as of December 31, 2014, by the lower-of-cost-or-market method, applying this method directly to each item.

(b) Determine the inventory by the lower-of-cost-or-market method, applying the method to the total of the inventory.

$

Part No.

Quantity

Cost per Unit

Cost to Replace per Unit

110 630 $119 $132 111 1,100 79 69 112 520 106 100 113 240 224 238 120 430 271 275 121 a 1,700 21 18 122 330 317 310

Explanation / Answer

3T Company

a.

a. Inventory as of December 31, 2013 : $ 476,582

b. Inventory as of December 31, 2013 : $ 489,852

Part no. Cost Current replacement cost Lower of cost or current replacement cost 110 74,970 83,160 $ 74,970 111 86,900 75,900 $ 75,900 112 55,120 52,000 $ 52,000 113 53,760 57,120 $ 53,760 120 116,530 118,250 $ 116,530 121 $ 1,122 122 104,610 102,300 $ 102,300 Total $ 493,012 $ 489,852 $ 476,582

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