Question

PLEASE PUT SOLUTION IN THE SAME FORMAT AS THE IMAGE THANK YOU!

Tatum Company has four products in its inventory. Information about the December 31, 2021, Inventory is as follows: Product 101 102 103 104 Total Cost $161,000 119,400 79,500 40,600 Total Replacement Cost $146,900 112,700 53,000 37,900 Total Net Realizable Value $133,500 145,900 67,100 68,100 The normal profit is 40% of total cost. Required: 1. Determine the carrying value of Inventory at December 31, 2021, assuming the lower of cost or market (LCM) rule is applied to Individual products. 2. Assuming that Inventory write-downs are common for Tatum Company, record any necessary year-end adjusting entry. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Determine the carrying value of inventory at December 31, 2021, assuming the lower of cost or market (LCM) rule is applied to individual products. Product Total Cost Replacement cost NRV NRV - NP Market Inventory Value 101 102 103 104 Totals Required 1 Required 2 >

Answer 1

Solution 1:

Computation of carrying value of inventory at December 31, 2021
Product	Total Cost	Replacement cost (a)	NRV (b)	NRV-NP [NRV- Cost*40%] (c )	Market (Middle Value of a,b,c)	Inventory value (Lower of Cost or Market)
101	161000	146900	133500	69100	133500	133500
102	119400	112700	145900	98140	112700	112700
103	79500	53000	67100	35300	53000	53000
104	40600	37900	68100	51860	51860	40600
Totals	400500					339800

Solution 2:

Transaction	General Journal	Debit	Credit
1	Cost of goods sold (400500- 339800)	60700
	Inventory		60700