Question

Problem 17.3A Applying the lower of cost or net realizable value rule by different methods. LO 17-3 This data is for selected Inventory items at Deluxe Supply Company Not Realizable Quantity Unit Cost Value CBOOK 46 20.50 20.00 Printer Cartridges Item 119 Item 120 Item 121 Fax Machines Item 210 25.00 88.00 11.00 227.00 Item 212 Required: 1&2. Determine the total amount to be reported as the inventory valuation at cost or net realizable value, whichever is lower, under lower of cost or net realizable value for each item separately and lower of total cost or total realizable value. 3. Determine the total amount to be reported as the inventory valuation at cost or net realizable value, whichever is lower, under lower of total cost or total nel realizable value by group Analyze: Which valuation method will yield the highest net income? Complete this question by entering your answers in the tabs below. < Prey 3 of 6 Next >

Answer 1

				net realizable value(nrv)
Pinter catridge	qty	cost	cost or nrv whichever is lower	total value
item	119	46.00	20.5	20.00	20.00	920.00
item	120	56.00	18.5	19.75	18.50	1,036.00
item	121	86.00	24.5	25.00	24.50	2,107.00
Fax machine
item	210	27.00	91	88.00	88.00	2,376.00
item	211	22.00	188	194.00	188.00	4,136.00
item	212	21.00	212	227.00	212.00	4,452.00
	total value of inventory when each item shown seperately	15,027.00
Pinter catridge	qty	cost	nrv	total cost	total nrv
item	119	46.00	20.5	20.00	943.00	920.00
item	120	56.00	18.5	19.75	1,036.00	1,106.00
item	121	86.00	24.5	25.00	2,107.00	2,150.00
total value				4,086.00	4,176.00
	value of inventory when reported in group is total value of cost or nrv whichever is lower
		that is	4086 or 4176 whichever is lower
	value of printer catridge is 4086
Fax machine	qty	cost	nrv	total cost	total nrv
item	210	27.00	91	88.00	2,457.00	2,376.00
item	211	22.00	188	194.00	4,136.00	4,268.00
item	212	21.00	212	227.00	4,452.00	4,767.00
					11,045.00	11,411.00
	value of fax machine will be 11045 or 11411 whichever is lower
	value of fax machine =11045
	total value of inventory reported in group=11045+4086	15,131.00
	total value of inventory when each item shown seperately	15,027.00
	total value of inventory reported in group		15,131.00
	valuation by group will yield highest net income in the above question