Question

Decker Company has five products in its inventory. Information about the December 31, 2021, inventory follows. Unit Unit Selling Product Quantity Cost Price 1,200 $ 14 $20 1,000 19 800 400 see 22 17 The cost to sell for each product consists of a 10 percent sales commission Required: 1. Determine the carrying value of inventory at December 31, 2021, assuming the lower of cost or net realizable value (LCNRV) rule is applied to individual products. 2. Determine the carrying value of inventory at December 31, 2021, assuming the LCNRV rule is applied to the entire inventory. 3. Assuming inventory write-downs are common for Decker record any necessary year-end adjusting entry based on the amount calculated in requirement 2.

Answer 1

Answer
									2	1
				Unit Selling	Sales				Entire	Individual
Product		Quantity	Unit Cost	Price	Commission	NRV per unit	Costs	NRV	Inventory	Items
A		1200	14	20	2	18	$       16,800	$       21,600		$       16,800
B		1000	19	22	2.2	19.8	$       19,000	$       19,800		$       19,000
C		800	5	10	1	9	$         4,000	$         7,200		$         4,000
D		400	9	8	0.8	7.2	$         3,600	$         2,880		$         2,880
E		800	18	17	1.7	15.3	$       14,400	$       12,240		$       12,240
							$       57,800	$       63,720	$     57,800	$       54,920
3)
	No Journal Entry required.
	Because Cost = LCNRV