A physical inventory of Office Necessities Company taken at December 31 reveals the following. Item Units Cost per Unit Market per Unit Office furniture Desks 536 $261 $305 Chairs 395 227 256 Mats 687 49 43 Bookshelves Filing cabinets Two-drawer Four-drawer 421 93 82 114 81 70 298 135 122 Lateral 75 104 118 Office equipment Projectors 370 168 200 Copiers 475 317 288 Phones 302 125 117

A physical inventory of Office Necessities Company taken at December 31 reveals the following. Item Units Cost per Unit Market per Unit Office furniture Desks 536 $261 $305 Chairs 395 227 256 Mats 687 49 43 Bookshelves Filing cabinets Two-drawer Four-drawer 421 93 82 114 81 70 298 135 122 Lateral 75 104 118 Office equipment Projectors 370 168 200 Copiers 475 317 288 Phones 302 125 117

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

100%

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 Office Necessities Company taken at December 31 reveals the following.
Item
Units
Cost per Unit
Market per Unit
Office furniture
Desks
536
$261
$305
Chairs
395
227
256
Mats
687
49
43
Bookshelves
Filing cabinets
Two-drawer
Four-drawer
421
93
82
114
81
70
298
135
122
Lateral
75
104
118
Office equipment
Projectors
370
168
200
Copiers
475
317
288
Phones
302
125
117

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