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Forester Company has five products in its inventory. Information about the December 31, 2018, inventory follows. Unit Unit Unit Replacement Cost Selling Price Product Quantity 1,000 800 Cost A S 14 $16 $20 22 B 19 7 15 C 700 6 12 D 600 11 8 10 E 800 18 16 17 The cost to sell for each product consists of a 15 percent sales commission. The normal profit percentage for each product is 35 percent of the selling price. Required: 1. Determine the carrying value of inventory at December 31, 2018, assuming the lower of cost or market (LCM) rule is applied to individual products. 2a. Determine the carrying value of inventory at December 31, 2018, assuming the LCM rule is applied to the entire inventory 2b. Assuming inventory write-downs are usual business practice for Forester, record any necessary year-end adjusting entry

Answer 1

Solukion Caying value c& Inventovy ab December 31,2018, assuming LOWEN COSE o iecykel (lM) yule PYasuct RC COst NRV Inventoyy Mayket NRU- NP Lunits Value $1G1000 Slu1000 $141000 $161000 $ I71000 $13p00 A LIouo &I2,000 9 IS RO0 12,000 $l41960 Bla00) $121000 412 l4o $ 5ju60 41200 $ 61600 $ u00 $ 5il00 $ 11,560 $ (41400 $ II,5 60 E(200) 12,00 1560 49820 $55,\00 $47260 NObe'- Maxket value - nidlle value c RC, NRV NRV-NP COSt o Mavek value whicheve is loucy. 2 Invenkory value

EYPlanation' Calculalion o Rc, Nrv, NRV-uP, COst E. A Goo Quantity N000 200 00 $11 $12 tia b unt cost $14 16 $2 15 Dnit Replacement 16 COst $10 Sn unt seling pyíce $22 $20 2.55 $1.5 さ3.3 sales comm.is $3 35 5.95 NOvmal pritdxs $7 RC(axd G000 $12100o $oo $U200 $12,200 nutaxCi-) NRU-NP- ) Cost (axり S1Ta00 $Ik960 $7,140 $5,lo $1I,560 S131000 1o. $5,k60 $30 $2,240 $141000 $1S2DU šhi100 $ G,600 g14,400

Tnvenkory carvgina value - 49,820 Explanation Iiventory anying - Lower & COSŁ OY Hayket valne Value ak De,31,2012 $uq820 (os $55,l lower 26 Adjusting Entyy Event Gieneval JOuYnal Debit Cyedill) Cosk gook sold $5,280 $5,290 nuentory o vecorsOSs om Invenkoy wvibe -down) Explanabion' The amownb of joss & Inventovy byite doun is 5,290 Le $55,100 -4a920),
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