Question

3. (8 points) Smashing Pumpkins Company uses the lower-of-cost-or-market method, on an individual-item basis, in pricing its inventory items. The inventory at December 31, 2014, consists of products D, E, F, G, H, and I. Relevant per-unit data for these products appear below. Item D Item E Item F Item G Item H Item I Estimated selling price $130 $100 $90 $85 $105 $80 70 80 60 80 Cost 45 32 Replacement cost Estimated selling expense Normal profit 110 65 70 30 70 30 25 25 20 20 25 25 20 20 20 20 20 20 Instructions Using the lower-of-cost-or-market rule, determine the proper unit value for balance sheet reporting purposes at December 31, 2014, for each of the inventory items above.

Answer 1

Answer - If=d-e) (a) * (C) Estimated Selling Expense (d=b-c) celling (NRV) (e Normal Profit Estimated selling price Replacement Floor . marbet valu Item cost = $105 $20 $85 $25 $130 $ 110 $105 $65 $55 $20 $25 $75 $100 $70 it 50 $20 $70 o Was I w 4 $85 $65 $20 20 $70 $25 $105 $80 $35 20 کو 35 $25 $80 * step CI): a cors d which evean is lower step(2).- value in step(l) cors step Cf) :- whicheveen is higher

calculation of Ending inventoy lower of cost cor market cost per market value Ilem value $(05 $70 80 65 45 $65 $60 llows H $45 50 че 45 е $45 $32