Question

A physical inventory of Liverpool Company taken at December 31 reveals the following Per Unit Item Car audio equipment Units Cost Market Speakers Stereos Amplifiers Subwoofers 349 $104 $112 264 125 115 330 100 109 208 66 56 Security equipment Alarms Locks Cameras 484 164 154 295 107 97 216 326 336 Binocular equipment Tripods Stabilizers 189 88 98 174 109 119 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

Answer 1

Per Unit Total LCM applied to ltems Units Cost Market Cost MarketIndividula Items Car audio equipment Speaker Stereos Amplifiers Subwoofers 349 264 330 208 $104 $112$36,296 $39,088 $125 $115$33,000 $30,360 $100$109$33,000 $35,970 $66 $36,296 $30,360 $33,000 $11,648 $56 $13,728 | $11,648 Security Equipment Alarms Locks Cameras 484 295 216 $164 $154$79,376 $74,536 $107 S326 $336 $70,416$72,576 $74,536 $28,615 $70,416 $97 $31,565 $28,615 Binocular equipment $88 $109$119 $18,966 $20,706 $98 $16,632 $18,522 Tripods Stabilizers 189 174 $16,632 $18,966 $3,20,469 Total S3,32.979 Reduce in value of Inventory Cost - LCM-$332,979 $320,469 $12,510 Dec.31 $12,510 Cost of Goods Sold to Inventory $12,510