Forest Company has five products in its inventory. Information about ending inventory follows. Unit Replacement Unit Selling Cost Price $12 $16 Product Quantity A 1,000 B C D E 800 600 200 600 Unit Cost $ 10 15 3 7 14 3 21242 11 18 8 6 13 The cost to sell for each product consists of a 15 percent sales commission. The normal profit for each product is 40 percent of the selling price. Required: 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. 3. Assuming inventory write-downs are common for Forest, record any necessary year-end adjusting entry based on the amount calculated in requirement 2.

Forest Company has five products in its inventory. Information about ending inventory follows. Unit Replacement Unit Selling Cost Price $12 $16 Product Quantity A 1,000 B C D E 800 600 200 600 Unit Cost $ 10 15 3 7 14 3 21242 11 18 8 6 13 The cost to sell for each product consists of a 15 percent sales commission. The normal profit for each product is 40 percent of the selling price. Required: 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. 3. Assuming inventory write-downs are common for Forest, record any necessary year-end adjusting entry based on the amount calculated in requirement 2.

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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