Sanchez Company was formed on January 1 of the current year and is preparing the annual financial statements dated December 31, current year. Ending inventory information about the four major items stocked for regular sale follows: Item A B C D ENDING INVENTORY, CURRENT YEAR Quantity Unit Cost When on Hand Acquired (FIFO) 32 67 47 22 $ 17 46 57 34 Net Realizable Value (Market) at Year-End $12 42 59 29 Required: 1. Compute the valuation that should be used for the current year ending inventory using lower of cost or net realizable value applied on an item-by-item basis. 2. What will be the effect of the write-down of inventory to lower of cost or net realizable value on cost of goods sold for the year ended December 31, current year?

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
icon
Related questions
Topic Video
Question

Please do not give solution in image format thanku 

Required 1 Required 2
Compute the valuation that should be used for the current year ending inventory using lower of cost or net realizable value
applied on an item-by-item basis.
Total Net
Item Quantity Total Cost Realizable
Value
A
B
C
D
32
67
47
22
Total
Required 1
$
Required 2
0 $
Lower of
Cost or
NRV
0 $
0
< Required 1
Required 2 >
What will be the effect of the write-down of inventory to lower of cost or net realizable value on cost of goods sold for the year ended December 31, current year?
The write-down to lower of cost or net realizable value wil
cost of goods sold expense by the amount of the write-down,
<Required 1
Transcribed Image Text:Required 1 Required 2 Compute the valuation that should be used for the current year ending inventory using lower of cost or net realizable value applied on an item-by-item basis. Total Net Item Quantity Total Cost Realizable Value A B C D 32 67 47 22 Total Required 1 $ Required 2 0 $ Lower of Cost or NRV 0 $ 0 < Required 1 Required 2 > What will be the effect of the write-down of inventory to lower of cost or net realizable value on cost of goods sold for the year ended December 31, current year? The write-down to lower of cost or net realizable value wil cost of goods sold expense by the amount of the write-down, <Required 1
Sanchez Company was formed on January 1 of the current year and is preparing the annual financial statements dated December 31,
current year. Ending inventory information about the four major items stocked for regular sale follows:
Item
A
B
C
D
Quantity
on Hand
32
67
47
22
ENDING INVENTORY, CURRENT YEAR
Unit Cost When
Acquired (FIFO)
$ 17
46
57
34
Net Realizable Value
(Market) at Year-End
$12
42
59
29
Required:
1. Compute the valuation that should be used for the current year ending inventory using lower of cost or net realizable value applied
on an item-by-item basis.
2. What will be the effect of the write-down of inventory to lower of cost or net realizable value on cost of goods sold for the year
ended December 31, current year?
Transcribed Image Text:Sanchez Company was formed on January 1 of the current year and is preparing the annual financial statements dated December 31, current year. Ending inventory information about the four major items stocked for regular sale follows: Item A B C D Quantity on Hand 32 67 47 22 ENDING INVENTORY, CURRENT YEAR Unit Cost When Acquired (FIFO) $ 17 46 57 34 Net Realizable Value (Market) at Year-End $12 42 59 29 Required: 1. Compute the valuation that should be used for the current year ending inventory using lower of cost or net realizable value applied on an item-by-item basis. 2. What will be the effect of the write-down of inventory to lower of cost or net realizable value on cost of goods sold for the year ended December 31, current year?
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 3 steps

Blurred answer
Knowledge Booster
Accounting for Merchandise Inventory
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education