Question

E7-12 Reporting Inventory at Lower of Cost or Market/Net Realizable Value [LO 7-4) Sandals Company is preparing the annual financial statements dated December 31 Ending Inventory is present y recorded at its total cost of $10.250. Information about its inventory items follows: $90 Unit Cost Quantity when hequired Value Product Line on Hand (TITO) at Year-End Air Flow 25 $92 Blister 15 Buster Coolonite 20 Dudenly 60 90 Required: 1. Compute the LCM/NRV write-down per unit and in total for each item in the table. Also compute the total overall write-down for all items. 2. How will the write-down of Inventory to lower of cost or market/net realizable value affect the company's expenses reported for the year ended December 31? 3. Compute the amount that should be reported for the inventory on December 31, after the LCMNRV rule has been applied to each item. Complete this question by entering your answers in the tabs below. Required Required Required Compute the LCM/NRV write-down per unit and in total for each item in the table. Also compute the total overall write-down for all items. Product Line Write- Quantity down on Hand pertem Total Write- down Air Flow Blister Buster Coolonite Dudesly Total 60 PE Required 2 >

Answer 1

1
Product Line	Quantity on Hand	Write-down per item	Total Write-down
Air Flow	25	0	0
Blister Buster	15	4	60
Coolonite	70	7	490
Dudesly	60	0	0
Total			550
2
Cost of goods sold will be increased by $550
3
Product Line	Quantity on Hand	Lower of cost or market	Inventory
Air Flow	25	90	2250
Blister Buster	15	76	1140
Coolonite	70	13	910
Dudesly	60	90	5400
Total			9700
Inventory amount	9700