Lower of Cost or Market Shaw Systems sells a limited line of specially made products, using television advertising campaigns in large cities. At year end, Shaw has the following data for its inventory: Item Phone Stereo Electric shaver MP3 alarm clock Handheld game system Required: Number of Units 600 180 220 430 570 Historical Cost per Unit $24 177 30 26 40 Selling Price per Unit $10 190 35 25 19 Disposal Costs $4 9 3 2 1. Compute the carrying value of the ending inventory using the lower of cost or net realizable value rule applied on an item-by-item basis. 2. Prepare the journal entry required to value the inventory at lower of cost or net realizable value. If an amount box does not require an entry, leave it blank.
Lower of Cost or Market Shaw Systems sells a limited line of specially made products, using television advertising campaigns in large cities. At year end, Shaw has the following data for its inventory: Item Phone Stereo Electric shaver MP3 alarm clock Handheld game system Required: Number of Units 600 180 220 430 570 Historical Cost per Unit $24 177 30 26 40 Selling Price per Unit $10 190 35 25 19 Disposal Costs $4 9 3 2 1. Compute the carrying value of the ending inventory using the lower of cost or net realizable value rule applied on an item-by-item basis. 2. Prepare the journal entry required to value the inventory at lower of cost or net realizable value. If an amount box does not require an entry, leave it blank.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Lower of Cost or Market
Shaw Systems sells a limited line of specially made products, using television advertising campaigns in large cities. At year end, Shaw has
the following data for its inventory:
Item
Phone
Stereo
Electric shaver
MP3 alarm clock
Handheld game system
Required:
Number of
Units
600
180
220
430
570
Historical Cost
per Unit
$24
177
30
26
40
Selling Price
per Unit
$10
190
35
25
19
Disposal
Costs
$4
9
3
2
3
<
1. Compute the carrying value of the ending inventory using the lower of cost or net realizable value rule applied on an item-by-item basis.
2. Prepare the journal entry required to value the inventory at lower of cost or net realizable value. If an amount box does not require an
entry, leave it blank.
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