Question

The inventory of Sheridan Company on December 31, 2020, consists of the following items. Part Quantity Cost per Unit Net Realizable Value 110 600 $107.00 $113.00 111 1,000 67.80 59.00 112 500 90.40 86.00 113 210 192.10 203.40 120 410 232.00 235.00 121 a 1,600 18.00 1.00 122 270 271.20 266.00 a Part No. 121 is obsolete and has a realizable value of $1.00 each as scrap. (a) Determine the inventory as of December 31, 2020, by the LCNRV method, applying this method to each item. Inventory as of December 31, 2020 $enter the Inventory as of December 31 in dollars (b) Determine the inventory by the LCNRV method, applying the method to the total of the inventory. Inventory as of December 31, 2020 $enter the Inventory as of December 31 in dollars

Answer 1

Calculations:

Part no	Quantity	Cost	Net realizable value	Total cost	Total NRV	Lower of cost or NRV
110	600	$107.00	$113	$64,200	$67,800	$64,200
111	1,000	$67.80	$59	$67,800	$59,000	$59,000
112	500	$90.40	$86	$45,200	$43,000	$43,000
113	210	$192.10	$203.40	$40,341	$42,714	$40,341
120	410	$232	$235	$95,120	$96,350	$95,120
121	1,600	$18	$1	$28,800	$1,600	$1,600
122	270	$271.20	$266	$73,224	$71,820	$71,820
				$414,685	$382,284	$375,081

1. Inventory value based on LCNRV - each item = $375,081.

2. Inventory value based on LCNRV- Total inventory = $382,284

____×____

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