**LO 5-2** **Exercise 5-11A: Lower-of-cost-or-market rule**Brooks Company carries three inventory items. The following information pertains to the ending inventory.| Item | Quantity | Unit Cost | Unit Market Value ||------|----------|-----------|-------------------|| A | 120 | $60 | $55 || F | 170 | 80 | 75 || K | 110 | 30 | 40 |**Required:**a. Determine the ending inventory that Brooks will report on the balance sheet, assuming that it applies the lower-of-cost-or-market rule to individual inventory items.b. Prepare the necessary journal entry, assuming the decline in value was immaterial.

Introduction:- Brooks company Carries three inventory systems Inventory should be valued at cost or…

Exercise 5-11A Lower-of-cost-or-market rule Brooks Company carries three inventory items. The following information pertains to the ending inventory. Item A F K Quantity 120 170 110 Unit Cost $60 80 30 Unit Market Value $55 75 40 Required a. Determine the ending inventory that Brooks will report on the balance sheet, assuming that it applies the lower-of-cost-or-mar rule to individual inventory items. b. Prepare the necessary journal entry, assuming the decline in value was immaterial.

Exercise 5-11A Lower-of-cost-or-market rule Brooks Company carries three inventory items. The following information pertains to the ending inventory. Item A F K Quantity 120 170 110 Unit Cost $60 80 30 Unit Market Value $55 75 40 Required a. Determine the ending inventory that Brooks will report on the balance sheet, assuming that it applies the lower-of-cost-or-mar rule to individual inventory items. b. Prepare the necessary journal entry, assuming the decline in value was immaterial.

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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EX 7-4 Perpetual inventory using LIFO OBJ. 2, 3 Assume that the business in Exercise 7-3 maintains a perpetual inventory system, costing by the last-in, first-out method. Determine the cost of merchandise sold for each sale and the inventory balance after each sale, presenting the data in the form illustrated in Exhibit 4.
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