Jones company is preparing the annual financial statements dated december 31 of the current year. ending inventory information about the five major items stocked for regular sale follows: ending inventory, current year item quantity on hand unit cost when acquired (fifo) net realizable value (market) at year-end a 50 $ 15 $ 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 current year ending inventory using the lcm rule applied on an item-by-item basis.

Question

Cason

Business

3 September, 13:14

Jones company is preparing the annual financial statements dated december 31 of the current year. ending inventory information about the five major items stocked for regular sale follows: ending inventory, current year item quantity on hand unit cost when acquired (fifo) net realizable value (market) at year-end a 50 $ 15 $ 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 current year ending inventory using the lcm rule applied on an item-by-item basis.

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Evelin · Answer 1

The value of ending inventory under LCM rule on an item by item basis is $ 7,370

Explanation:

Computation of ending inventory in LCM rule

Item No of Units Cost NRV Basis Inventory valuation

a 50 $ 15 $ 12 NRV $ 600

b 80 $ 30 $ 40 Cost $ 2,400

c 10 $ 48 $ 52 Cost $ 520

d 70 $ 25 $ 30 Cost $ 2.100

e 350 $ 10 $ 5 NRV $ 1,750

Total Inventory valuation $ 7,370