Almaden Hardware Store sells two product categories, tools and paint products. I

Question

Almaden Hardware Store sells two product categories, tools and paint products. Information pertaining to its 2018 year-end inventory is as follows:

Required:
1. Determine the carrying value of inventory at year-end, assuming the lower of cost or net realizable value (LCNRV) rule is applied to (a) individual products, (b) product categories, and (c) total inventory.
2. Assuming that the company reports an inventory write-down as a line item in the income statement, for each of the LCNRV applications determine the amount of the loss.

Inventory,
by Product Category Quantity Per Unit
Cost Net Realizable Value Tools: Hammers 100 $ 4.50 $ 5.00 Saws 150 9.50 8.50 Screwdrivers 250 1.50 2.10 Paint products: 1-gallon cans 450 5.50 4.50 Paint brushes 100 3.50 4.00

Explanation / Answer

Requirement 1 & 2

(a) individual products

carrying value of inventory & the amount of the loss due to LCNRV applications

LCNRV($)

(b) product categories

Carrying value of inventory & the amount of the loss due to LCNRV applications

(c) total inventory

Items Per Quantity Cost($) NRV($)

LCNRV($)

Quantity Ennding Inventory Value ($) loss due to LCNRV applications ($) Hammers 4.5 5 4.5 100 450 0 Saws 9.5 8.5 8.5 150 1,275 (9,5 - 8.5) * 150 = 150 Screwdrivers 1.5 2.10 1.5 250 375 0 1-gallon cans 5.5 4.5 4.5 450 2,025 (5.5 - 4.5) * 450 = 450 Paint brushes 3.5 4 3.5 100 350 0 Total 4,475 600

Related Questions

Navigate

• Browse (All)
• Browse A
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.