Forest Company has five products in its inventory. Information abo follows. Product Quantity Cost $ A 900 29 34 22 BCDE 900 900 900 26 1,000 33 rea Unit Unit Replacement Cost $31 Required 1 Required 2 Required 3 Product (units) A (900) B (900) Cann) 0131 30 RC 223 21 NRV 23 31 Unit Selling Price The cost to sell for each product consists of a 20 percent sales commission. The normal profit for each product is 40 percent of the selling price. $35 37 752 1. Determine the carrying value of ending inventory, assuming the lower of cost or market (LCM) rule is applied to individual products. 2. Determine the carrying value of inventory, assuming the LCM rule is applied to the entire inventory. 27 3. Assuming inventory write-downs are common for Forest, record any necessary year- end adjusting entry based on the amount calculated in requirement 2. 25 Complete this question by entering your answers in the tabs below. NRV minus NP 32 Determine the carrying value of ending inventory, assuming the lower of cost or market (LCM) rule is applied to individual products. Note: Do not round intermediate calculations. Market Cost Inventory value
Forest Company has five products in its inventory. Information abo follows. Product Quantity Cost $ A 900 29 34 22 BCDE 900 900 900 26 1,000 33 rea Unit Unit Replacement Cost $31 Required 1 Required 2 Required 3 Product (units) A (900) B (900) Cann) 0131 30 RC 223 21 NRV 23 31 Unit Selling Price The cost to sell for each product consists of a 20 percent sales commission. The normal profit for each product is 40 percent of the selling price. $35 37 752 1. Determine the carrying value of ending inventory, assuming the lower of cost or market (LCM) rule is applied to individual products. 2. Determine the carrying value of inventory, assuming the LCM rule is applied to the entire inventory. 27 3. Assuming inventory write-downs are common for Forest, record any necessary year- end adjusting entry based on the amount calculated in requirement 2. 25 Complete this question by entering your answers in the tabs below. NRV minus NP 32 Determine the carrying value of ending inventory, assuming the lower of cost or market (LCM) rule is applied to individual products. Note: Do not round intermediate calculations. Market Cost Inventory value
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Forest Company has tive products in its inventory. Information about ending inventory
follows.
Product Quantity Cost
$
A
900
29
34
22
BC
с
D
E
900
900
900
1,000
Lea
Unit
Unit
Unit Replacement Selling
Cost
Price
26
33
Required 1
Product
(units)
A (900)
B (900)
C/900)
$ 31
30
21
The cost to sell for each product consists of a 20 percent sales commission. The normal
profit for each product is 40 percent of the selling price.
Required 2 Required 3
RC
0131
223
23
1. Determine the carrying value of ending inventory, assuming the lower of cost or
market (LCM) rule is applied to individual products.
2. Determine the carrying value of inventory, assuming the LCM rule is applied to the
entire inventory.
31
3. Assuming inventory write-downs are common for Forest, record any necessary year-
end adjusting entry based on the amount calculated in requirement 2.
NRV
Complete this question by entering your answers in the tabs below.
57223
$35
Determine the carrying value of ending inventory, assuming the lower of cost or market (LCM) rule is applied to individual
products.
Note: Do not round intermediate calculations.
NRV minus NP
Market
Cost
Inventory
value
Expert Solution
Concept Introduction:
Inventory is one of important current asset being held by the business. Inventory valuation is also very important for business organisation. Under LCM (Lower of cost or market value) rule, inventory is valued at lower of cost or market value prevailing at that time.
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