Required: 1. Calculate the total recorded cost of ending inventory before any adjustments. 2. Calculate ending inventory using the lower of cost and net realizable value. 3. Record any necessary adjusting entry for inventory. 4. Determine the impact of the adjusting entry in the financial statements.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Down Home Furnishings reports inventory using the lower of cost and net realizable value (NRV). Below is information related to its
year-end inventory.
Inventory
Furniture
Electronics
Quantity
160
46
Unit Cost
$81
360
Unit NRV
$96
310
Required:
1. Calculate the total recorded cost of ending inventory before any adjustments.
2. Calculate ending inventory using the lower of cost and net realizable value.
3. Record any necessary adjusting entry for inventory.
4. Determine the impact of the adjusting entry in the financial statements.
Transcribed Image Text:Down Home Furnishings reports inventory using the lower of cost and net realizable value (NRV). Below is information related to its year-end inventory. Inventory Furniture Electronics Quantity 160 46 Unit Cost $81 360 Unit NRV $96 310 Required: 1. Calculate the total recorded cost of ending inventory before any adjustments. 2. Calculate ending inventory using the lower of cost and net realizable value. 3. Record any necessary adjusting entry for inventory. 4. Determine the impact of the adjusting entry in the financial statements.
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