Sandals Company is preparing the annual financial statements dated December 31.

Question

Sandals Company is preparing the annual financial statements dated December 31. Ending inventory information about the four major items stocked for regular sale follows: Quantity Unit Cost When Market Value on Hand Acquire(FIFO) at Year-End Product Line Air Flow Blister Buster Coolonite Dudesly $14 36 65 26 $16 34 60 31 30 85 20 Ending Inventory 2. How will the write-down of inventory to lower of cost or market affect the company's expenses reported for the year ended December 31? Cost of goods sold will be

Explanation / Answer

Product line Quantity Unit cost Market value LCM Total LCM Total cost Air flow 30 14 16 14 420 420 Blister Buster 85 36 34 34 2890 3060 Coolonite 33 65 60 60 1980 2145 Dudesly 20 26 31 26 520 520 Total 5810 6145 1 Ending inventory = $5810 2 Cost of goods sold will be increased by $335(6145-5810)

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