Question

QUESTION 12 Murphy, Inc. had the following balances and transactions during 2017 Bry Tur 10 Deo Decem 10 572 Puntlased 15 Sola is unit Replies The company materyal ng the story by the Callie en lending Machine December 2017 on the words are de 5207 OST O 140 1.215 QUESTO FW OUT O $ 5 3 d 6 E R T Y U 1 O Р D F H J K

Answer 1

Solution:

The correct option is $1,005.

Explanation:

Beginning inventory (10 units × $72)	$720
10June, purchased (20:units × $85)	$1,700
30 December ,sold units	15
31 December, replacement cost	$67

The lower of cost or market rule states that the inventory should be valued at the lowest purchase cost or market price.

In this, the purchase cost using LIFO (last in, first out)

10 units at $72	$720
5 units at $85	$425
Total cost	$1,145

Then, replacement cost is $1,005 (15 units × $67)

The lowest value is the replacement cost $1,005.