Question

PLEASE HELP ASAP!! THANK YOU A physical inventory of Liverpool Company taken at December 31 reveals the following.

		Per Unit
Item	Units	Cost		Market
Audio equipment
Receivers	347	$	102	$	92
CD players	262		123		113
MP3 players	328		98		88
Speakers	206		43		54
Video equipment
Handheld LCDs	482		127		152
VCRs	293		86		95
Camcorders	214		324		312
Car audio equipment
Satellite radios	187		86		72
CD/MP3 radios	172		107		99

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. (If no entry is required for a particular transaction, select "No journal entry required" in the first account field.)

     

Answer 1

Items	Units	Per unit		Total		LCM applied to
		Cost	Market	Cost	Market	Individual items
audio equipment
Receiver	347	$102	$92	$35,394	$31,924	$31,924
CD Player	262	$123	$113	$32,226	$29,606	$29,606
MP3 Player	328	$98	$88	$32,144	$28,864	$28,864
Speaker	206	$43	$54	$8,858	$11,124	$8,858
Video Equipment equipment
HandlHeld LCD	472	$127	$152	$59,944	$71,744	$59,944
VCR	283	$86	$95	$24,338	$26,885	$24,338
Camcorders	204	$324	$312	$66,096	$63,648	$63,648
Car Audio Equipment
Satellite Radio	187	$86	$72	$16,082	$13,464	$13,464
CD/MP3 Radio	172	$107	$99	$18,404	$17,028	$17,028
Total				$293,486	$294,287	$277,674

No.	Date	General journal	Dr.	Cr.
1	Dec-31	Cost of goods sold [$293486- $277674]	$15,812
		To Merchandise inventory		$15,812
NOte:-  Adjusting entry for $15812 (Total inventory cost of $293486 - LCM by items of $277674