Basic inventory data for April 30 are presented below for a business that employs the lower-of-cost-or-market basis of inventory valuation to each category. a.  Complete the table. Commodity Quantity Unit Cost Price Unit Market Price Total Cost Total Market Total Lower of Cost or Market A 35     $52     $55     $fill in the blank 1   $fill in the blank 2   $fill in the blank 3   B 20     155     150     fill in the blank 4   fill in the blank 5   fill in the blank 6   C 25     82     85     fill in the blank 7   fill in the blank 8   fill in the blank 9   D 40     58     55     fill in the blank 10   fill in the blank 11   fill in the blank 12   Total                   $fill in the blank 13   $fill in the blank 14   $fill in the blank 15   b.  Determine the amount of reduction in the inventory at April 30 attributable to market decline. $fill in the blank 16

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A:

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.