Reporting Inventory at Lower of Cost or Market
Jones Company is preparing the annual financial statements dated December 31, 2012. Ending inventory information about the five major items stocked for regular sale follows:
ENDING INVENTORY, 2012 | |||
Item | Quantity on Hand | Unit Cost When Acquired (FIFO) | Replacement Cost (Market) at Year-End |
A | 50 | $I5 | $12 |
B | 80 | 30 | 40 |
C | 10 | 48 | 52 |
D | 70 | 25 | 30 |
E | 350 | 10 | 5 |
Required:
Compute the valuation that should be used for the 2012 ending inventory using the LCM rule applied on an item-by-item basis. (Hint: Set up columns for Item, Quantity, Total Cost, Total Market, and LCM Valuation.)
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