Question

Problem 9-2 Lower of cost or net realizable value [LO9-1] Almaden Hardware Store sells two product categories, tools and paint products. Information pertaining to its 2018 year-end inventory is as follows: Net Realizable Value Inventory by Product Category Tools: Per Unit Quantity Cost $ 5.00 Hammers Saws Screwdrivers Paint products: 1-gallon cans Paint brushes 100 $5.50 9.00 2.60 10.00 2.00 200 300 500 6.00 5.00 100 4.00 4.50 Required: 1. Determine the carrying value of inventory at year-end, assuming the lower of cost or net realizable value (LCNRV) rule is applied to (a) individual products, (b) product categories, and (c) total inventory. 2. Assuming that the company reports an inventory write-down as a line item in the income statement, for each of the LCNRV applications determine the amount of the loss. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Determine the carrying value of inventory at year-end, assuming the lower of cost or net realizable value (LCNRV) rule is applied to (a) individual products, (b) product categories, and (c) total inventory Lower of cost or NRV Net Realizable Value By Individual Products By Product Туре By Total Inventory Product Cost Tools Hammers Saws Screwdrivers Total tools Paint products: 1-gallon cans Paint brushes Total paint Total Required 2 Required 1

Answer 1

Solution 1:

F G H I K L M Almaden Hardware store Computation of Carrying Value of Ending Inventory on LCM/NRV Basis Cost Net Realizable Value Lower of Cost and NRV Quantity Cost per unit Total Cost Per unit Total By Individual By Product By Total Products Categories Inventory Product 100 200 300 $5.00 $500.00 $10.00 $2,000.00 $2.00 $600.00 $3,100.00 $5.50 $550.00 $9.00 $1,800.00 $2.60 $780.00 $3,130.00 $500.00 $1,800.00 $600.00 $2,900.00 $3,100.00 Tools: Hammers Saws Screwdrivers Total Tool (A) Paint Products: 1-Gallon cans Paint Brushes Total Paint (B) Total (A+B) 11 12 13 14 15 16 17 18 500 100 $6.00 $3,000.00 $4.00 $400.00 $3,400.00 $6,500.00 $5.00 $2,500.00 $4.50 $450.00 $2,950.00 $6,080.00 $2,500.00 $400.00 $2,900.00 $5,800.00 $2,950.00 $6,050.00 $6,080.00 26 27 28 29 30 31 32 33 34 35 36 42 43 44 45 46 47 65 66 106 (14) ) Sheet420 Sheet 421 Sheet422 Sheet423

Solution 2:

O P Q R S Computation of amount of Loss By Individual Product ($6500-$5800) By Product Categories ($6500-$6050) By total Inventory ($6500-$6080) 700.00 450.00 420.00 17 19 21 22 26 27 28 30 31 33 38 39 42 45 46 47 106 (14) ) noves presente sunt main Sheet420 Sheet421 ) Sheet422 C Sheet423