Question

A&B is a clothing retailer. Below is the cost and NRV information for its inventory at Oct.31st: Units Item Blouses Shirts Jeans Shoes Purses Skirts Shorts Unit Cost Unit NRV 100 30 25 50 25 30 20 100 20 20 75 50 20 50 50 a) What is the ending inventory balance at Oct.31st using the lower of cost and NRV? b) What journal entry is required?

Answer 1

Requirement A Items Blouses Shirts Jeans Shoes Unit cost unit NRV Lower of cost or nrv Total of lower of cost or nrv Units 25.00$ 25.00$ 20.00 $ 20.00 $ 15.00 $ 100 $ 30.00 $25.00 $ 50 25.00 50.00 2,500.00 $ 30 20.00 $100.00 1,250.00 $ 20 20.00 $ 75.00 15 15.00 $ 40.00 20 50.00 50.00 15 30.00 $ 25.00 600.00 400.00 Purses 225.00 50.00$ 25.00 $ Skirts 1,000.00 shorts 375.00 Ending Inventory Balance Oct 31st 6,350.00 A

Requirement B General Journal Debit Credit Date $575.00 31-Oct Cost of Goods sold $575.00 Inventory (To Record the adjusting entry) Note $ Less Valuation of ending inventory $ Total Cost 6,925.00 (6,350.00) Written down value 575.00