Problem 6-4A (Algo) Report inventory using lower of cost and net realizable value (LO6-6) A local Chevrolet dealership carries the following types of vehicles: Inventory Items Vans Quantity 2 Unit Cost $23,000 Unit NRV $21,000 Trucks 5 17,200 16,200 2-door sedans 1 12,200 14,200 4-door sedans 6 16,200 19,200 Sports cars 2 33,000 36,000 SUVS 7 28,400 24,000 Because of recent increases in gasoline prices, the car dealership has noticed a reduced demand for its SUVs, vans, a Required: 1. Compute the total cost of the entire inventory. es 2. Determine whether each inventory item would be reported at cost or net realizable value (NRV). Enter the amount of Cost or Unit NRV in the "Lower of Cost and NRV per unit" column and then multiply this amount by the quantity of each and enter it in the Total column. 3. Record any necessary adjusting entry to write down inventory from cost to net realizable value. 4. Determine the financial statement effects of using lower of cost and net realizable value to report inventory. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Determine the financial statement effects of using lower of cost and net realizable value to report inventory. (Make sure to e with a minus sign.) Revenues Income Statement: Expenses Cost of Goods Sold Balance Sheet: Assets Liabilities < Required 3 Required 4 >
Problem 6-4A (Algo) Report inventory using lower of cost and net realizable value (LO6-6) A local Chevrolet dealership carries the following types of vehicles: Inventory Items Vans Quantity 2 Unit Cost $23,000 Unit NRV $21,000 Trucks 5 17,200 16,200 2-door sedans 1 12,200 14,200 4-door sedans 6 16,200 19,200 Sports cars 2 33,000 36,000 SUVS 7 28,400 24,000 Because of recent increases in gasoline prices, the car dealership has noticed a reduced demand for its SUVs, vans, a Required: 1. Compute the total cost of the entire inventory. es 2. Determine whether each inventory item would be reported at cost or net realizable value (NRV). Enter the amount of Cost or Unit NRV in the "Lower of Cost and NRV per unit" column and then multiply this amount by the quantity of each and enter it in the Total column. 3. Record any necessary adjusting entry to write down inventory from cost to net realizable value. 4. Determine the financial statement effects of using lower of cost and net realizable value to report inventory. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Determine the financial statement effects of using lower of cost and net realizable value to report inventory. (Make sure to e with a minus sign.) Revenues Income Statement: Expenses Cost of Goods Sold Balance Sheet: Assets Liabilities < Required 3 Required 4 >
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Problem 6-4A (Algo) Report inventory using lower of cost and net realizable value (LO6-6)
A local Chevrolet dealership carries the following types of vehicles:
Inventory Items
Vans
Quantity
2
Unit Cost
$23,000
Unit NRV
$21,000
Trucks
5
17,200
16,200
2-door sedans
1
12,200
14,200
4-door sedans
6
16,200
19,200
Sports cars
2
33,000
36,000
SUVS
7
28,400
24,000
Because of recent increases in gasoline prices, the car dealership has noticed a reduced demand for its SUVs, vans, a
Required:
1. Compute the total cost of the entire inventory.
es
2. Determine whether each inventory item would be reported at cost or net realizable value (NRV). Enter the amount of
Cost or Unit NRV in the "Lower of Cost and NRV per unit" column and then multiply this amount by the quantity of each
and enter it in the Total column.
3. Record any necessary adjusting entry to write down inventory from cost to net realizable value.
4. Determine the financial statement effects of using lower of cost and net realizable value to report inventory.
Complete this question by entering your answers in the tabs below.
Required 1 Required 2 Required 3
Required 4
Determine the financial statement effects of using lower of cost and net realizable value to report inventory. (Make sure to e
with a minus sign.)
Revenues
Income Statement:
Expenses
Cost of Goods Sold
Balance Sheet:
Assets
Liabilities
< Required 3
Required 4 >
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