Lower-of-Cost-or-Market Inventory Data on the physical inventory of Katus Produc
ID: 2544308 • Letter: L
Question
Lower-of-Cost-or-Market Inventory
Data on the physical inventory of Katus Products Co. as of December 31 follows:
Quantity and cost data from the last purchases invoice of the year and the next-to-the-last purchases invoice are summarized as follows:
Required:
Determine the inventory at cost as well as at the lower of cost or market, using the first-in, first-out method. Record the appropriate unit costs on the inventory sheet, and complete the pricing of the inventory. When there are two different unit costs applicable to an item:
Insert the quantity and unit cost of the last purchase.
On the following line, insert the quantity and unit cost of the next-to-the-last purchase.
Total the cost and market columns and insert the lower of the two totals in the LCM column.
The first item on the inventory sheet has been completed as an example.
InventoryItem Inventory
Quantity Market Value per Unit
(Net Realizable Value) A54 37 $ 56 C77 24 178 F66 30 132 H83 21 545 K12 375 5 Q58 90 18 S36 8 235 V97 140 20 Y88 17 744
Explanation / Answer
Answer
Inventory Sheet
Inventory
Inventory
Cost per
Market Value per Unit
Total Cost – (C) (Units x A)
Total Market (D) (Units x B)
Total LCM (Lower of C and D)
Item
Quantity
Unit (A)
(Net Realizable Value) (B)
A54
37
30
$ 60.00
$ 56.00
$ 1,800.00
$ 1,680.00
7
$ 58.00
$ 56.00
$ 406.00
$ 392.00
$ 2,206.00
$ 2,072.00
$ 2,072.00
C77
24
24
$ 174.00
$ 178.00
$ 4,176.00
$ 4,272.00
$ 4,176.00
F66
30
20
$ 130.00
$ 132.00
$ 2,600.00
$ 2,640.00
10
$ 128.00
$ 132.00
$ 1,280.00
$ 1,320.00
$ 3,880.00
$ 3,960.00
$ 3,880.00
H83
21
6
$ 547.00
$ 545.00
$ 3,282.00
$ 3,270.00
15
$ 540.00
$ 545.00
$ 8,100.00
$ 8,175.00
$ 11,382.00
$ 11,445.00
$ 11,382.00
K12
375
375
$ 6.00
$ 5.00
$ 2,250.00
$ 1,875.00
$ 1,875.00
Q58
90
75
$ 25.00
$ 18.00
$ 1,875.00
$ 1,350.00
15
$ 26.00
$ 18.00
$ 390.00
$ 270.00
$ 2,265.00
$ 1,620.00
$ 1,620.00
S36
8
5
$ 256.00
$ 235.00
$ 1,280.00
$ 1,175.00
3
$ 260.00
$ 235.00
$ 780.00
$ 705.00
$ 2,060.00
$ 1,880.00
$ 1,880.00
V97
140
100
$ 17.00
$ 20.00
$ 1,700.00
$ 2,000.00
40
$ 16.00
$ 20.00
$ 640.00
$ 800.00
$ 2,340.00
$ 2,800.00
$ 2,340.00
Y88
17
10
$ 750.00
$ 744.00
$ 7,500.00
$ 7,440.00
7
$ 740.00
$ 744.00
$ 5,180.00
$ 5,208.00
$ 12,680.00
$ 12,648.00
$ 12,648.00
Total
$ 43,239.00
$ 42,572.00
$ 41,873.00
Inventory Sheet
Inventory
Inventory
Cost per
Market Value per Unit
Total Cost – (C) (Units x A)
Total Market (D) (Units x B)
Total LCM (Lower of C and D)
Item
Quantity
Unit (A)
(Net Realizable Value) (B)
A54
37
30
$ 60.00
$ 56.00
$ 1,800.00
$ 1,680.00
7
$ 58.00
$ 56.00
$ 406.00
$ 392.00
$ 2,206.00
$ 2,072.00
$ 2,072.00
C77
24
24
$ 174.00
$ 178.00
$ 4,176.00
$ 4,272.00
$ 4,176.00
F66
30
20
$ 130.00
$ 132.00
$ 2,600.00
$ 2,640.00
10
$ 128.00
$ 132.00
$ 1,280.00
$ 1,320.00
$ 3,880.00
$ 3,960.00
$ 3,880.00
H83
21
6
$ 547.00
$ 545.00
$ 3,282.00
$ 3,270.00
15
$ 540.00
$ 545.00
$ 8,100.00
$ 8,175.00
$ 11,382.00
$ 11,445.00
$ 11,382.00
K12
375
375
$ 6.00
$ 5.00
$ 2,250.00
$ 1,875.00
$ 1,875.00
Q58
90
75
$ 25.00
$ 18.00
$ 1,875.00
$ 1,350.00
15
$ 26.00
$ 18.00
$ 390.00
$ 270.00
$ 2,265.00
$ 1,620.00
$ 1,620.00
S36
8
5
$ 256.00
$ 235.00
$ 1,280.00
$ 1,175.00
3
$ 260.00
$ 235.00
$ 780.00
$ 705.00
$ 2,060.00
$ 1,880.00
$ 1,880.00
V97
140
100
$ 17.00
$ 20.00
$ 1,700.00
$ 2,000.00
40
$ 16.00
$ 20.00
$ 640.00
$ 800.00
$ 2,340.00
$ 2,800.00
$ 2,340.00
Y88
17
10
$ 750.00
$ 744.00
$ 7,500.00
$ 7,440.00
7
$ 740.00
$ 744.00
$ 5,180.00
$ 5,208.00
$ 12,680.00
$ 12,648.00
$ 12,648.00
Total
$ 43,239.00
$ 42,572.00
$ 41,873.00
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