The inventory of Flounder Company on December 31, 2017, consists of the followin

Question

The inventory of Flounder Company on December 31, 2017, consists of the following items Quantity Cost per Unit NRV $110 42 No 680 1,010 460 390 410 1,490 500 $90 60 90 150 195 16 260 110 112 180 218 0.2 235 113 120 121 122 *Part no. 121 is obsolete and has a realizable value of $0.2 each as scrap (a) Determine the inventory as at December 31, 2017, by the lower of cost and net realizable value method, applying this method directly to each item. Inventory as at December 31, 2017 (b) Determine the inventory as at December 31, 2017, by the lower of cost and net realizable value method, applying the method to the total of the inventory Inventory as at December 31, 2017

Explanation / Answer

Answer:-a)-

Inventory as at December 31,2017=$117500

b)-

Inventory as at December 31,2017=$417258

Calculation of closing inventory as of December31,2017 for each item By using Lower of cost or Net Realizable Vaue Method Closing Inventory Part Quantity (a) Cost per unit Net Reliazable value Valued on $ Per unit (b) Amount $ (C=a*b) $ $ 110 610 90 110 Cost 90 54900 111 1010 60 42 Net Reliazable value 42 42420 112 460 90 66 Net Reliazable value 66 30360 113 390 150 180 Cost 150 58500 120 410 195 218 Cost 195 79950 121* 1490 16 0.2 Net Reliazable value 0.2 298 122 500 260 235 Net Reliazable value 235 117500

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