Edgar Co. determines from a physical inventory count taken on the last day of fiscal 20X7 that its LIFO-basis inventory of widgets is $16,000, with a replacement cost of $14,000. Edgar estimates that, after further processing costs of $8,000, the widgets could be sold as finished Widgetrons for $28,000. Edgar's normal profit margin is 15% of sales. According to the lower of cost or market rule, what amount should Edgar report as widget inventory in its balance sheet for fiscal 20X7?

Question

Nathanael Wong

Business

5 June, 08:05

Edgar Co. determines from a physical inventory count taken on the last day of fiscal 20X7 that its LIFO-basis inventory of widgets is $16,000, with a replacement cost of $14,000. Edgar estimates that, after further processing costs of $8,000, the widgets could be sold as finished Widgetrons for $28,000. Edgar's normal profit margin is 15% of sales. According to the lower of cost or market rule, what amount should Edgar report as widget inventory in its balance sheet for fiscal 20X7?

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Timber · Answer 1

According to the lower of cost or market rule, what amount should Edgar report as widget inventory in its balance sheet for fiscal 20X7?

$15800

Explanation:

Sold price 28000

% profit margen 15%

profit margin 4200

Cost 23800

Procesing cost 8000

Inventory 15800