Question

Exam More Impoted 103 50,000 30,000 104 I. Determine the carrying value of inventory at December 31, 2018, assuming the lower of cost or net realizable Required value (LCNRV) rule is applied to individual products. 2. Assuming that inventory write-downs are common for Tatum Company, record any necessary year-end adjusting entry. [This is a variation of E 9-1, modified to focus on the lower of cost or market.] Herman Company has three prod ucts in its ending inventory. Specific per unit data at the end of the year for each of the products are as follows E/9-4 Lower of cost or market Product 1 Product 2 Product 3 TTT LO9-1 $20 $ 90 $50 Cost 18 85 40 Replacement cost Selling price Selling costs Normal profit margin 40 120 70 6 40 10 5 30 12 Required: What unit values should Herman use for each of its products when applying the lower of cost or market (LCM rule to ending inventory? [This is a variation of E 9-2, modified to focus on the lower of cost or market.] The inventory of Royal Deckine consisted of five products. Information about the December 31, 2018, inventory is as follows: E 9-5 Lower of cost or market LO9-1 Per Unit TITT Product Cost Replacement Cost Selling Price A $ 40 $35 $ 60 B 80 70 100 C 40 55 80 D 100 70 130 E 20 28 30 Selling costs consist of a sales commission equal to 10 % of selling price and shipping costs equal to 5% of co The normal gross profit percentage is 30 % of selling price. Required: What unit value should Royal Decking use for each of its products when applying the lower of cost or market (LCM) rule to units of ending inventory?

can someone please give me infos for 9-4 and 9-5 ?

thank you

Answer 1

Answer To Question no 1
	PRODUCTS
	Product - 1	Product - 2	Product - 3
Cost for LCM Comparision
1. Cost	$ 20	$ 90	$ 50
Factors Determining the Market
2. Replacement Cost	18	85	40
3. Selling Price	40	120	70
4. Selling Cost	6	40	10
5. Normal Profit Margin	5	30	12
6. Market Ceiling : Net Realizeable Value (NRV) (3 - 4)	34	80	60
7. Market Floor : NRV - Normal Profit ( 6 - 5 )	29	50	48
Market for LCM Comparision
8. The Market ( As per note below)	29	80	48
Result
9. LCM Reported in Inventoy ( Cost or market WEL)	20	80	48
	cost	Market	Market
Answer to Question no - 02
	PRODUCTS
	A	B	C	D	E
Cost for LCM Comparision
1. Cost	40	80	40	100	20
Factors Determining the Market
2. Replacement Cost	35	70	55	70	28
3. Selling Price	60	100	80	130	30
4. Selling Cost
Sales Commission @ 10% on Selling Price	6	10	8	13	3
Shipping Cost @ 5% of Cost	2	4	2	5	1
	8	14	10	18	4
5. Normal Profit Margin	18	30	24	39	9
6. Market Ceiling : Net Realizeable Value (NRV) (3 - 4)	52	86	70	112	26
7. Market Floor : NRV - Normal Profit ( 6 - 5 )	34	56	46	73	17
Market for LCM Comparision
8. The Market ( As per note below)	35	70	55	73	26
Result
9. LCM Reported in Inventoy ( Cost or market WEL)	35	70	40	73	20
	Market	Market	Cost	Market	Cost
Note: Market value for LCM comparision is always the Middle value among Replacement cost, NRV and market floor.