Inventory Write-Down Palmquist Company has five different inventory items and applies the inventory valuation rules on an individual item basis. The normal markup on all items is 20% of cost. The following information is obtained from the company’s records: Item Units Cost Replacement Cost Net Realizable Value 1 500 $10.00 $ 9.10 $ 9.20 2 400 8.00 8.10 7.80 3 300 15.00 13.50 14.00 4 200 18.00 12.00 17.00 5 100 25.00 25.50 25.30 Instructions: 1. Assume that Palmquist uses the FIFO cost flow assumption. Compute the correct inventory value under the lower of cost or net realizable value rule. Round your answers to the nearest cent. Item Lower of Cost or NRV 1 $ fill in the blank 1 2 fill in the blank 2 3 fill in the blank 3 4 fill in the blank 4 5 fill in the blank 5 Compute the total inventory value if the lower of cost or net realizable value is applied to each individual item. $ fill in the blank 6 2. Assume that Palmquist uses the LIFO cost flow assumption. Compute the correct inventory value under the lower of cost or market rule. Round your answers to the nearest cent. Item Lower of Cost or Market 1 $ fill in the blank 7 2 fill in the blank 8 3 fill in the blank 9 4 fill in the blank 10 5 fill in the blank 11 Compute the total inventory value if the lower of cost or market is applied to each individual item. $ fill in the blank 12 3. Assume that Palmquist uses IFRS. Compute the correct inventory value under the lower of cost or net realizable value rule. Round your answers to the nearest cent. Item Lower of Cost or NRV 1 $ fill in the blank 13 2 fill in the blank 14 3 fill in the blank 15 4 fill in the blank 16 5 fill in the blank 17 Compute the total inventory value if the lower of cost or market is applied to each individual item. $ fill in the blank 18

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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Inventory Write-Down

Palmquist Company has five different inventory items and applies the inventory valuation rules on an individual item basis. The normal markup on all items is 20% of cost. The following information is obtained from the company’s records:

Item	Units	Cost	Replacement Cost	Net Realizable Value
1	500	$10.00	$ 9.10	$ 9.20
2	400	8.00	8.10	7.80
3	300	15.00	13.50	14.00
4	200	18.00	12.00	17.00
5	100	25.00	25.50	25.30

Instructions:

1. Assume that Palmquist uses the FIFO cost flow assumption. Compute the correct inventory value under the lower of cost or net realizable value rule. Round your answers to the nearest cent.

Item		Lower of Cost or NRV
1		$ fill in the blank 1
2		fill in the blank 2
3		fill in the blank 3
4		fill in the blank 4
5		fill in the blank 5

Compute the total inventory value if the lower of cost or net realizable value is applied to each individual item.

$ fill in the blank 6

2. Assume that Palmquist uses the LIFO cost flow assumption. Compute the correct inventory value under the lower of cost or market rule. Round your answers to the nearest cent.

Item		Lower of Cost or Market
1		$ fill in the blank 7
2		fill in the blank 8
3		fill in the blank 9
4		fill in the blank 10
5		fill in the blank 11

Compute the total inventory value if the lower of cost or market is applied to each individual item.

$ fill in the blank 12

3. Assume that Palmquist uses IFRS. Compute the correct inventory value under the lower of cost or net realizable value rule. Round your answers to the nearest cent.

Item		Lower of Cost or NRV
1		$ fill in the blank 13
2		fill in the blank 14
3		fill in the blank 15
4		fill in the blank 16
5		fill in the blank 17

Compute the total inventory value if the lower of cost or market is applied to each individual item.

$ fill in the blank 18

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