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.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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.
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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