atum Company has four products in its inventory. Information about ending inventory is as follows:ProductTotal Cost101$ 149,000102110,80010373,80010437,500Total ReplacementCost$ 136,100Total NetRealizable Value$ 123,700104,60049,200135,40035,00062,10062,800he normal profit is 40% of total cost.equired:1. Determine the carrying value of inventory assuming the lower of cost or market (LCM) rule is applied to individualproducts.2. Assuming that inventory write-downs are common for Tatum Company, record any necessary year-end adjusting entry.Complete this question by entering your answers in the tabs below.Required 1 Required 2Determine the carrying value of inventory assuming the lower of cost or market (LCM) rule is applied to individual products.ProductTotal CostReplacementcostNRVNRV minus NPMarketInventory Value101$149,000 $136,100 $123,700102110,800104,600135,40010373,80049,20062,10010437,50035,00062,800Totals$371,100< Required 1Required 2 >

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Description: atum Company has four products in its inventory. Information about ending inventory is as follows:ProductTotal Cost101$ 149,000102110,80010373,80010437,500Total ReplacementCost$ 136,100Total NetRealizable Value$ 123,700104,60049,200135,40035,00062,1

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atum Company has four products in its inventory. Information about ending inventory is as follows: Product Total Cost 101 $ 149,000 102 110,800 103 104 73,800 37,500 Total Replacement Cost $ 136,100 104,600 49,200 35,000 Total Net Realizable Value $ 123,700 135,400 62,100 62,800

atum Company has four products in its inventory. Information about ending inventory is as follows: Product Total Cost 101 $ 149,000 102 110,800 103 104 73,800 37,500 Total Replacement Cost $ 136,100 104,600 49,200 35,000 Total Net Realizable Value $ 123,700 135,400 62,100 62,800

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 Valuation

Before discussing the topic inventory valuation let’s discuss the meaning of inventory. In accounting, inventory is also known as stock. Inventory means all the finished goods, materials, merchandise that a business holds for the purpose of selling it in the market with the motive of earning profit.

Topic Video

Question

atum Company has four products in its inventory. Information about ending inventory is as follows:
Product
Total Cost
101
$ 149,000
102
110,800
103
73,800
104
37,500
Total Replacement
Cost
$ 136,100
Total Net
Realizable Value
$ 123,700
104,600
49,200
135,400
35,000
62,100
62,800
he normal profit is 40% of total cost.
equired:
1. Determine the carrying value of inventory assuming the lower of cost or market (LCM) rule is applied to individual
products.
2. Assuming that inventory write-downs are common for Tatum Company, record any necessary year-end adjusting entry.
Complete this question by entering your answers in the tabs below.
Required 1 Required 2
Determine the carrying value of inventory assuming the lower of cost or market (LCM) rule is applied to individual products.
Product
Total Cost
Replacement
cost
NRV
NRV minus NP
Market
Inventory Value
101
$
149,000 $
136,100 $
123,700
102
110,800
104,600
135,400
103
73,800
49,200
62,100
104
37,500
35,000
62,800
Totals
$
371,100
< Required 1
Required 2 >

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