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Blossom Co. follows the practice of valuing its inventory at the lower-of-cost-or-market. The following information is available from he company's inventory records as of December 31, 2025. Item Quantity Unit Cost $9.08 A B C D E 1,700 1,400 1,600 1,600 2,000 9.92 6.78 4.60 7.74 Replacement Cost/Unit $10.16 9.56 6.53 5.08 7.62 Estimated Selling Completion & Disposal Price/Unit Cost/Unit $12.71 11.37 8.71 7.62 8.11 $1.82 1.09 1.39 0.97 0.85 Normal Profit Margin/Unit $2.18 1.45 0.73 1.82 1.21 Greg Forda is an accounting clerk in the accounting department of Blossom Co., and he cannot understand why the market value keeps changing from replacement cost to net realizable value to something that he cannot even figure out. Greg is very confused, and he is the one who records inventory purchases and calculates ending inventory. You are the manager of the department and an accountant.

Blossom Co. follows the practice of valuing its inventory at the lower-of-cost-or-market. The following information is available from he company's inventory records as of December 31, 2025. Item Quantity Unit Cost $9.08 A B C D E 1,700 1,400 1,600 1,600 2,000 9.92 6.78 4.60 7.74 Replacement Cost/Unit $10.16 9.56 6.53 5.08 7.62 Estimated Selling Completion & Disposal Price/Unit Cost/Unit $12.71 11.37 8.71 7.62 8.11 $1.82 1.09 1.39 0.97 0.85 Normal Profit Margin/Unit $2.18 1.45 0.73 1.82 1.21 Greg Forda is an accounting clerk in the accounting department of Blossom Co., and he cannot understand why the market value keeps changing from replacement cost to net realizable value to something that he cannot even figure out. Greg is very confused, and he is the one who records inventory purchases and calculates ending inventory. You are the manager of the department and an accountant.

FINANCIAL ACCOUNTING
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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Blossom Co. follows the practice of valuing its inventory at the lower-of-cost-or-market. The following information is available from the company's inventory records as of December 31, 2025. Item A B C E Quantity Unit Cost 1,700 $9.08 1,400 1,600 1,600 2,000 9.92 6.78 4.60 7.74 Replacement Cost/Unit $10.16 9.56 6.53 5.08 7.62 Estimated Selling Completion & Disposal Price/Unit Cost/Unit $12.71 11.37 8. 7.62 8.11 $1.82 1.09 1.39 0.97 0.85 Normal Profit Margin/Unit $2.18 1.45 0.73 1.82 1.21 Greg Forda is an accounting clerk in the accounting department of Blossom Co., and he cannot understand why the market value keeps changing from replacement cost to net realizable value to something that he cannot even figure out. Greg is very confused, and he is the one who records inventory purchases and calculates ending inventory. You are the manager of the department and an accountant.
Transcribed Image Text:Blossom Co. follows the practice of valuing its inventory at the lower-of-cost-or-market. The following information is available from the company's inventory records as of December 31, 2025. Item A B C E Quantity Unit Cost 1,700 $9.08 1,400 1,600 1,600 2,000 9.92 6.78 4.60 7.74 Replacement Cost/Unit $10.16 9.56 6.53 5.08 7.62 Estimated Selling Completion & Disposal Price/Unit Cost/Unit $12.71 11.37 8. 7.62 8.11 $1.82 1.09 1.39 0.97 0.85 Normal Profit Margin/Unit $2.18 1.45 0.73 1.82 1.21 Greg Forda is an accounting clerk in the accounting department of Blossom Co., and he cannot understand why the market value keeps changing from replacement cost to net realizable value to something that he cannot even figure out. Greg is very confused, and he is the one who records inventory purchases and calculates ending inventory. You are the manager of the department and an accountant.
Your answer is correct. Calculate the lower-of-cost-or-market using the individual-item approach. (Round answers to 2 decimal places, e.g. 78.73.) Item A Item B Item C Item D Item E Lower-of-Cost-or-Market (Per unit basis) $ $ $ $ Inventory $ 9.08 9.56 Cost of Goods Sold 6.59 Show Transcribed Text 4.60 Your answer is partially correct. Loss method: 7.26 Account Titles and Explanation Cost of Goods sold Method: Show the journal entry he will need to make in order to write down the ending inventory from cost to market. (List all debit entries before credit entries. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter O for the amounts.) Loss Due to Market Decline of Inventory. G Allowance to Reduce Inventory to Market +) Debit 836 836 Credit 836 836
Transcribed Image Text:Your answer is correct. Calculate the lower-of-cost-or-market using the individual-item approach. (Round answers to 2 decimal places, e.g. 78.73.) Item A Item B Item C Item D Item E Lower-of-Cost-or-Market (Per unit basis) $ $ $ $ Inventory $ 9.08 9.56 Cost of Goods Sold 6.59 Show Transcribed Text 4.60 Your answer is partially correct. Loss method: 7.26 Account Titles and Explanation Cost of Goods sold Method: Show the journal entry he will need to make in order to write down the ending inventory from cost to market. (List all debit entries before credit entries. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter O for the amounts.) Loss Due to Market Decline of Inventory. G Allowance to Reduce Inventory to Market +) Debit 836 836 Credit 836 836
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