Tatum Company has four products in its inventory. Information about the December 31, 2021, inventory is as follows: Product Total Cost Total Replacement Cost Total Net Realizable Value 101 $ 163,000 $ 148,700 $ 135,100 102 120,800 114,000 147,600 103 80,400 53,600 67,900 104 41,100 38,400 69,000 The normal profit is 40% of total cost. Required: 1. Determine the carrying value of inventory at December 31, 2021, assuming the lower of cost or market (LCM) rule is applied to individual products. 2. Assuming that inventory write-downs are common for Tatum Company, record any necessary year-end adjusting entry.
Tatum Company has four products in its inventory. Information about the December 31, 2021, inventory is as follows: Product Total Cost Total Replacement Cost Total Net Realizable Value 101 $ 163,000 $ 148,700 $ 135,100 102 120,800 114,000 147,600 103 80,400 53,600 67,900 104 41,100 38,400 69,000 The normal profit is 40% of total cost. Required: 1. Determine the carrying value of inventory at December 31, 2021, assuming the lower of cost or market (LCM) rule is applied to individual products. 2. Assuming that inventory write-downs are common for Tatum Company, record any necessary year-end adjusting entry.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Tatum Company has four products in its inventory. Information about the December 31, 2021, inventory is as follows:
| Product | Total Cost | Total Replacement Cost |
Total Net Realizable Value |
||||||
| 101 | $ | 163,000 | $ | 148,700 | $ | 135,100 | |||
| 102 | 120,800 | 114,000 | 147,600 | ||||||
| 103 | 80,400 | 53,600 | 67,900 | ||||||
| 104 | 41,100 | 38,400 | 69,000 | ||||||
The normal profit is 40% of total cost.
Required:
1. Determine the carrying value of inventory at December 31, 2021, assuming the lower of cost or market (LCM) rule is applied to individual products.
2. Assuming that inventory write-downs are common for Tatum Company, record any necessary year-end
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