Question

Help Save & E Exercise 17.2 Using the lower of cost or net realizable value method. LO 17-3 The following information concerns four items that Modern Woman Clothiers has in its ending inventory on December 31 Two of these items are in the accessories department and two are in the women CEO department Realizable 1. What is the valuation of ending Inventory if the firm uses the lower of cost or het realizable value method and applies on an item by item basis? 2. If the company applies the lower of cost or net realizable value method on the basis of total cost or total net realizable value, what is the value of ending inventory? 3. If the company elects to apply the lower of cost or het realizate value method to inventory groups, what is the value of the ending Inventory? Complete this question by entering your answers in the tabs below.

Answer 1

total value of inventory when each item valued on an item by item basis
				net realizable value(nrv)
accessories	qty	cost	cost or nrv whichever is lower	total value
item	620	237.00	25	22.00	22.00	5,214.00
item	621	147.00	45	48.00	45.00	6,615.00
						-
women ceo
item	726	97.00	95	88.00	88.00	8,536.00
item	727	127.00	38	39.00	38.00	4,826.00
						-
total value of inventory when each item valued on an item by item basis	25,191.00
value of inventory on total cost or total net realizable value
				net realizable value(nrv)
accessories	qty	cost	total cost	total nrv
item	620	237.00	25	22.00	5,925.00	5,214.00
item	621	147.00	45	48.00	6,615.00	7,056.00
						-
women ceo					-
item	726	97.00	95	88.00	9,215.00	8,536.00
item	727	127.00	38	39.00	4,826.00	4,953.00
						-
total value				26,581.00	25,759.00
	value of inventory will be totalcost or total nrv whichever is lower
	that is 26581 or 25759 whichever is lower
	value of inventory total method =25759
value of inventory when reported in group
accessories	qty	cost	nrv	total cost	total nrv
item	620	237.00	25	22.00	5,925.00	5,214.00
item	621	147.00	45	48.00	6,615.00	7,056.00
total value				12,540.00	12,270.00
	value of inventory when reported in group is total value of cost or nrv whichever is lower
		that is	12540 or 12270 whichever is lower
	value of accessories is 12270
women ceo	qty	cost	nrv	total cost	total nrv
item	726	97.00	95	88.00	9,215.00	8,536.00
item	727	127.00	38	39.00	4,826.00	4,953.00
					14,041.00	13,489.00
	value ofwomen ceo will be 14041 or 13489 whichever is lower
	value of women ceo=13489
	total value of inventory reported in group=13489+12270	25,759.00
	total value of inventory when each item shown seperately	25,191.00
	total value of inventory reported in group		25,759.00
	total value of inventory in total cost method	25,759.00