Horizon Trading purchased inventory items at $45 per unit. The items are expected to sell for $65 per unit, but will require $25 in selling costs per unit. Using the Lower of Cost or Net Realizable Value rule, what value should Horizon report for this inventory on its balance sheet?

Horizon Trading purchased inventory items at $45 per unit. The items are expected to sell for $65 per unit, but will require $25 in selling costs per unit. Using the Lower of Cost or Net Realizable Value rule, what value should Horizon report for this inventory on its balance sheet?

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter8: Inventories: Special Valuation Issues

Section: Chapter Questions

Problem 2RE: Black Corporation uses the LIFO cost flow assumption. Each unit of its inventory has a net...

See similar textbooks

Related questions

Q: General Account

A: Concept of Common Stock:Common stock represents the ownership shares issued to investors in exchange…

Q: wanted general account questions answer

A: Step 1: Definition of Over-Applied OverheadOver-applied overhead means that the overhead applied to…

Q: Financial Accounting

A: Step 1: Define Accounting EquationThe accounting equation states that assets equal liabilities plus…

Q: ??!!

A: We determine the selling price per unit with a 50% markup as follows:Calculate Fixed Costs:• Total…

Q: Give me help

A: Concept of Joint Costs:Joint costs are the combined expenses incurred during a production process…

Q: provide correct answer general accounting

A: Step 1: Definition of Free Cash FlowFree Cash Flow (FCF) represents the cash a company generates…

Q: BrightCo has a net income of $5.4 million and 2 million common shares outstanding. Each share is…

A: EPS and P/E Ratio for BrightCoWe have given the following financial information for BrightCo:Net…

Q: Hi expert please give me answer general accounting question

A: Step 1: Definition of Net SalesNet Sales is the total revenue generated from sales after deducting…

Q: Help this answer

A: Step 1: Definition of Cost of ProductionCost of Production is the total cost incurred to manufacture…

Q: MID Company had originally expected to earn operating income of $130,000 in the coming year. MID's…

A: IntroductionThe notion of operating leverage is essential for comprehending how a company's…

Q: Answer expert

A: Step 1: Definition of Stockholders' EquityStockholders' Equity (also called shareholders' equity or…

Q: Please provide answer this general accounting question

A: Step 1: Definition of Predetermined Overhead RateThe Predetermined Overhead Rate is a rate…

Q: ??!!

Q: General Accounting Question

A: Step 1: Define Accounting EquationThe Accounting Equation is a fundamental principle in accounting…

Q: What is the net realizable value of the accounts receivables at year end

A: Concept of Accounts Receivable:Accounts Receivable refers to the amount of money owed to a business…

Q: I want to correct answer general accounting question

A: Step 1: Definition of Contribution Format Income StatementA Contribution Format Income Statement…

Q: Determine the amount of manufacturing overhead that would have been

A: Concept of Predetermined Overhead Rate:The predetermined overhead rate is an estimated rate used to…

Q: Net income

A: Let's break down the calculations step by step: 1. Equity Multiplier The equity multiplier is given…

Q: Need help with this question solution general accounting

A: Calculation of Total Stockholder's EquityTotal Stockholder's Equity = Common Stock+ Preferred Stock+…

Q: Find out solution to this accounting question

A: Concept of Operating Leverage:Operating leverage measures how sensitive a company's net income is to…

Q: Help

A: let's look at the options:a) Process effectiveness indicators complement cost measuresThis is the…

Q: Answer

A: To find the P/E (Price-to-Earnings) ratio, use the formula: P/E=Market Price per Share/Earnings per…

Q: The amount of gross profit for the year is?

A: Explanation of Finished Goods Inventory :Finished goods inventory represents the cost of completed…

Q: General accounting question

A: Step 1: Definition of Return on Assets (ROA):Return on Assets (ROA) is a financial ratio that…

Q: What is the gross margin for August on these financial accounting question?

A: Step 1: Define Gross MarginGross Margin is the difference between sales revenue and the cost of…

Q: How much were LCS's liabilities?

A: Explanation of Assets:Assets are everything a company owns that has economic value and can provide…

Q: Not use ai please solve this question general accounting

A: Step 1: Define GoodwillGoodwill is an intangible asset that represents the value of a business's…

Q: None

A: Calculation for underfunded amount of the Projected Benefit Obligation (PBO) at the end of 2024…

Q: What is the firm operating cycle?

A: Explanation of Operating Cycle:The operating cycle is the total number of days it takes a company to…

Q: Determine the predetermined factory overhead rate for these general accounting question

A: Step 1: Definition of Predetermined Factory Overhead RateThe Predetermined Factory Overhead Rate is…

Q: What is the differential revenue?

A: Step 1: Definition of Differential RevenueDifferential Revenue refers to the difference in revenue…

Q: need this general accounting subjects solutions

A: Step 1: Definition of High-Low MethodThe High-Low Method is a cost estimation technique used to…

Q: Given Financial accounting question answer

A: Step 1: Define Degree of Operating Leverage (DOL)The Degree of Operating Leverage (DOL) measures how…

Q: The company uses 1,500 units of an item per year. The cost of carrying the item in inventory is $180…

A: a. Economic Order Quantity (EOQ)The Economic Order Quantity (EOQ) is the optimal order size that…

Q: I need help with this solution and general accounting

A: Step 1: Definition of Overhead Variance (Underapplied or Overapplied)Overhead variance measures the…

Q: General Accounting Question

A: Step 1: Define Predetermined Overhead RateThe predetermined overhead rate is calculated at the…

Q: I need question answer financial accounting

A: Step 1: Define Profit Margin and Debt RatioProfit Margin: The ratio of Net Income to Sales,…

Q: ???

A: The Underfunded Amount is the excess of the PBO over the fair value of plan assets at the end of the…

Q: Expert need your help

A: To calculate Zendta Corporation's free cash flow (FCF) and earnings for the period: 1. Free Cash…

Q: A manufacturer produces a single product. Variable production costs are $15.25 per unit, and…

A: Concept of Variable Production Cost:Variable production cost refers to the cost that changes with…

Q: Compute the equivalent units for materials

A: Explanation of Work in Process (WIP): Work in Process represents inventory items that have started…

Q: please solve this problem

A: Step 1: Definition of Daily COGS (Cost of Goods Sold):Daily Cost of Goods Sold (COGS) is the average…

Q: 4 PTS

A: Let's analyze the problem step by step.Phoenix Industries generates free cash flows of $75 million…

Q: Brighton Electronics had a quick ratio of 1.6, a current ratio of 3.5, an inventory turnover ratio…

A: Step 1: Definition of Days' Sales Outstanding (DSO)DSO measures the average number of days a company…

Q: Kings Company has total assets of $240,000 and total liabilities of $80,000. The company's…

A: The debt-to-equity ratio is calculated as: Debt-to-Equity Ratio=Total Liabilities/Total Equity…

Q: Please answer do fast and step by step calculation with explanation of this financial accounting…

A: Step 1: IntroductionLiabilities decreased by $40,000Owner's equity increased by $90,000Any change in…

Q: Provide answer

A: Approach to solving the question: Detailed explanation: Examples: Key references:

Q: What is its total assets turnover

A: Step 1: Definition of Total Assets TurnoverTotal Assets Turnover measures how efficiently a company…

Q: What are zenith inc.'s net sales? Provide answer general accounting question please

A: Step 1: Define Net SalesNet Sales is the actual revenue earned by a company from sales after…

Q: Solve question financial accounting

A: Step 1: Define Operating LeverageOperating Leverage measures the sensitivity of operating income to…

Question

100%

What value should horizon report for this inventory on its balance sheet?

Horizon Trading purchased inventory items at $45 per unit. The
items are expected to sell for $65 per unit, but will require $25 in
selling costs per unit. Using the Lower of Cost or Net Realizable Value
rule, what value should Horizon report for this inventory on its
balance sheet?

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Similar questions

On the basis of the data shown below: Item InventoryQuantity Cost perUnit Market Value per Unit(Net Realizable Value) Raven 10 1,700 $163 $159 Dove 23 9,200 24 30 Determine the value of the inventory at the lower of cost or market. Apply lower of cost or market to each inventory item, as shown in Exhibit 9.$______
Black Corporation uses the LIFO cost flow assumption. Each unit of its inventory has a net realizable value of $300, a normal profit margin of $35, and a current replacement cost of $250. Determine the amount per unit that should be used as the market value to apply the lower of cost or market rule to determine Black’s ending inventory.
Company Z had the following information: inventory at cost of $5,100, selling value of inventory of $5,250, inventory cost of completion of $100, inventory cost of distribution of $150, normal profit margin of $2,000, and inventory replacement cost of $4,800. What is the floor amount to be used in the determination of the inventory's market value in the lower-of- cost-or-market method of inventory? O $3,000 O $5,000 O $4,800 O $5,250
The Company uses lower-of-cost-or-market approach. The replacement cost of an inventory item is $75. Net realizable value is $82.50. Net realizable value less a normal profit margin is $69. The cost of the item is $76.50. The inventory item would be valued at:
The following information is taken from a company’s records. Costper Unit Market valueper Unit Inventory Item 1 (10 units) $40 $39 Inventory Item 2 (23 units) 20 20 Inventory Item 3 (12 units) 8 10 Applying the lower-of-cost-or-market approach, what is the correct value that should be reported on the balance sheet for the inventory?
Smmons. Inc. uses the lower-of-cont-ormarket method to value s inventory that is accounted for using the FIFO method. Data regarding an tam in its inventory ls as follows Cost $26 Replacement cost 20 Selling price 30 Cost of completion and disposal 2 Normal profit margin 7. What is the lower-of-cost-or-mariket for this item?
Marzan Company uses LIFO and a perpetual inventory system for its leading product, Z. Given the historical cost of product Z is $22, the selling price of product Z is $25, costs to sell product Z are $3, the replacement cost for product Z is $21, and the normal profit margin is 40% of sales price, what is the amount that should be used to value the inventory under the lower-of-cost-or-market method? O $18 $20 $21 $22
On the basis of the following data: Product InventoryQuantity Cost perUnit Market Value per Unit(Net Realizable Value) Model A 42 $74 $90 Model B 45 181 202 Model C 29 166 171 Model D 12 130 112 Model E 24 159 158 Determine the value of the inventory at the lower of cost or market. Assemble the data in the form illustrated in Exhibit 9. Inventory at the Lower of Cost or Market Product Total Cost Total Market Lower of Total Cost or Total Market A $ $ $ B C D E Total $ $ $
A firm utilizes a periodic inventory cost system with a Last-In, First-Out (LIFO) cost flow assumption. What does the firm report as the lower of cost or market for the following two items? Item A Item B Costs to have inventory ready for sale $4 $0 Current Cost to Replace $50 $55 Estimated Selling Price $62 $70 Estimated Normal Profit Margin $12 $12 Cost per the accounting record $60 $60 Group of answer choices Item A: $46, Item B: $55 Item A: $46, Item B: $58 Item A: $46, Item B: $60 Item A: $50, Item B: $55 Item A: $50, Item B: $58
Inventory on the Balance Sheet On the basis of the following data, determine the value of the inventory at the lower of cost or market. Refer to Exhibit 8 for guidance. Product InventoryQuantity Cost per Unit Market Value per Unit(Net Realizable Value) Adams 53 259 270 Coolidge 101 203 169 McKinley 12 675 630 Garfield 125 90 68 Lincoln 150 203 212 Assuming that the cost was determined by the FIFO method, show how Inventory would appear on the balance sheet. The inventory would appear in the Current Assets section of the balance sheet as follows: Inventory at lower of cost (FIFO) or market $fill in the blank 3
Ross Electronics has one product in its ending inventory. Per unit data consist of the following: cost, $20; selling price, $30; selling costs, $4. What unit value should Ross use when applying the lower of cost or net realizable value rule to ending inventory?
What is the correct Cost of Goods Sold under the FIFO method given the following information? Beginning Inventory: 50 units @€10, Purchase 1: 15 units @€13, Purchase 2: 15 units @€15, Ending Inventory: 12 units. Assume that the sale occurs after all inventory purchases. Answer: X