A physical inventory of Liverpool Company taken at December 31 reveals the following. Item Units Cost per Unit Market per Unit Car audio equipment Speakers Stereos Amplifiers Subwoofers 345 $ 90 $ 98 260 111 100 326 86 95 204 52 41 Security equipment Alarms 480 150 125 Locks 291 93 84 Cameras 212 310 322 Binocular equipment Tripods 185 70 84 Stabilizers 170 97 105

A physical inventory of Liverpool Company taken at December 31 reveals the following. Item Units Cost per Unit Market per Unit Car audio equipment Speakers Stereos Amplifiers Subwoofers 345 $ 90 $ 98 260 111 100 326 86 95 204 52 41 Security equipment Alarms 480 150 125 Locks 291 93 84 Cameras 212 310 322 Binocular equipment Tripods 185 70 84 Stabilizers 170 97 105

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Inventory Accounting

Inventory accounting is that branch of accounting that helps in determining the specific value of assets at different stages of production and development.

Question

Required
1. Compute the lower of cost or market for the inventory applied separately to each item.
2. If the market amount is less than the recorded cost of the inventory, then record the LCM adjustment
to the Merchandise Inventory account.

A physical inventory of Liverpool Company taken at December 31 reveals the following.
Item
Units
Cost per Unit
Market per Unit
Car audio equipment
Speakers
Stereos
Amplifiers
Subwoofers
345
$ 90
$ 98
260
111
100
326
86
95
204
52
41
Security equipment
Alarms
480
150
125
Locks
291
93
84
Cameras
212
310
322
Binocular equipment
Tripods
185
70
84
Stabilizers
170
97
105

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