Question

Almaden Hardware Store sells two product categories, tools and paint products. Information pertaining to its 2018 year-end inventory is as follows: Net Per Unit Cost Realizable Value Quantity $ Inventory by Product Category Tools Hammers Sav Screwdrivers Paint products 1-gallon cans Paint brushes 110 210 5.10 10.10 2.10 $5.60 9.10 2.70 310 510 110 6.10 5.10 4.10 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

Answer 1

Part-1
Product		Qty	Cost	NRV	Cost	NRV	Lower Cost and NRV
							by Individual Product	by Product Type	By Total
Tools
Hammers		110	5.1	5.6	561.00	616.00	561.00
Saws		210	10.1	9.1	2,121.00	1,911.00	1,911.00
Screwdrivers		310	2.1	2.7	651.00	837.00	651.00
Total					3,333.00	3,364.00		3,333.00
Paint Products:
1-Gallon Cans		510	6.1	5.1	3,111.00	2,601.00	2,601.00
Paint brushes		110	4.1	4.6	451.00	506.00	451.00
Total Paint					3,562.00	3,107.00		3,455.00
Grand Total					6,895.00	6,471.00	6,175.00	6,788.00	6,471.00

Part-2
Application of valuation method		loss amount
a) individual products (6895-6175)		$720.00
b) product type (6895-6788)		$107.00
c) Total inventory (6895-6471)		$424.00