Question

QUESTION 5: P6-9ATascon Corporation sells coffee beans, which are sensitive to price fluctuations. The following inventory information is available for this product at December 31, 2018:

Coffee Bean	Units	Unit Cost	Net Realizable Value
Coffea arabica	13,000 bags	$5.60	$5.55
Coffea robusta	5,000 bags	3.40	3.50

(a) Calculate Tascon’s inventory at the lower of cost and net realizable value.

(b) Prepare any journal entry required to record the LCNRV, assuming that Tascon uses a perpetual inventory system.

(c) Explain whether Tascon should consider each type of coffee bean separately when determining the lower of cost and net realizable value. Identify an argument in support of both types of coffee beans being considered as part of one inventory grouping.

Answer 1

solution's or het realizable is lower of cost a) Inventory valuation value. Total inventory = coffea arabica value & coffen robusta valin = 13000 X 5.55 + SOUD X 3.40 72 150+ 17000 = inventory $89150 is $89150. Tascon's I b) perpetual Journal entry for recood of stock Difference is Account Debit I credit Loss on inventory write down Inventory XXX of $ 650 Debit I credit so, entry for stock reduces Account loss on inventory write down Inventory 650 650