Almaden Hardware Store sells two distinct types of products, tools and paint pro

Question

Almaden Hardware Store sells two distinct types of products, tools and paint products. Information pertaining to its 2016 year-end inventory is as follows: Determine the book value of inventory at year-end. assuming the lower of cost and net realizable value rule is applied to (a) individual products, (b) product type, and (c) total inventory. Assuming that the company reports an inventory write-down as a line item in the income statement, for each of the lower of cost and net realizable value applications determine the amount of the loss.

Explanation / Answer

1.Book value of inventory:

2. Amount of write-down loss:

Product Cost Net realizable value By individual products By product type By total inventory Tools $ $ $ $ $ Hammers 451 506 451 Saws 1,001 891 891 Screwdrivers 231 357 231 Total tools 1,683 1,754 1,683 Paint products 1-gallon cans 2,091 1,681 1,681 Paint brushes 341 396 341 Total paint products 2,432 2,077 2,077 Total 4,115 3,831 3,595 3,760 3,831

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