Question

A physical inventory of Liverpool Company taken at December 31 reveals the following. Per Unit Units Cost Market $100 121 345 260 326 204 $108 110 105 51 96 62 Item Car audio equipment Speakers Stereos Amplifiers Subwoofers Security equipment Alarms Locks Cameras Binocular equipment Tripods Stabilizers 135 480 291 212 160 103 320 332 18580 170 107 94 115 Required: 1. Calculate the lower of cost or market for the inventory applied separately to each item. 2. If the market amount is less than the recorded cost of the inventory, then record the LCM adjustment to the Merchandise Inventory account. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Calculate the lower of cost or market for the inventory applied separately to each item. Per Unit Cost Market Total Market LCM applied to: Individual Items Item Units Cost $ $ 345 260 326 204 100 121 96 62 108 110 105 51 / Car audio equipment Speakers Stereos Amplifiers Subwoofers Security equipment Alarms Locks Cameras Binocular equipment Tripods Stabilizers Total 480 291 212 160 103 320 135 94 332 1858094 170 107 115 Required 1 Required 2 >

Answer 1

Lower of Cost or Market for the inventory applied separately to each item Per Unit Total LCM applied to individual items Item Units Cost Market | Cost Market 345 $ 10 260 326 204 $ $ $ $ 100 $ 121 $ 96 $ 62 $ 108 $ 110$ 105 $ 51 $ 34,500 31,460 31,296 12,648 $ $ $ $ 37,260 $ 34,500 Cost 28,600 $ 28,600 Market 34,230 $ 31,296 Cost 10,404 $10,404 Market Car Audio Equipment Speakers Stereos Amplifiers Subwoofers Security equipment Alarms Locks Cameras Binocular equipment Tripods Stabilizers Total 480 291 212 $ $ $ 160 $ 103 $ 320 $ 135 $ 94 $ 332 $ 76,800 $ 29,973 $ 67,840 $ 64,800 $ 64,800 Market 27,354 $ 27,354 | Market 70,384 $ 67,840 Cost 185 170 $ $ 80 $ 107 $ 94 115 $ 14,800 $ 18,190 $ 317,507 $ $ 17,390 19,550 $ 14,800 Cost $ 18,190 | Cost $ 297,784

Date General Journal Debit Credit Dec-31 $ 19,723 Cost of Goods Sold Merchandise Inventory $ 19,723 (Adjustment of lower of cost or market is made to merchandise inventory account) Amount to be adjusted to Mechandise Inventory Total Cost of Ending Inventory Less : Total of Lower of Cost or Market applied to item wise Amount to be adjusted to Mechandise Inventory $ 317,507 $ (297,784) $ 19,723