Inventory: Inventory refers to the stock or goods which will be sold in the near future and thus is an asset for the company. It comprises of the raw materials which are yet to be processed, the stock which is still going through the process of production and it also includes completed products that are ready for sale. Thus inventory is the biggest and the important source of income and profit for the business. Merchandise Inventory: Merchandise inventory is the one which is purchased from the manufacturer with the purpose to sell it to the third party. Wholesalers, retailers, or distributors are ones who indulge into purchasing the products at a lower price and selling them at a higher price so to earn profits. Lower of cost or market: Lower of cost or market also known as LCM is an approach in which the inventory is recorded in the Balance Sheet at the cost of inventory or at the current market −the one with the lowest value. Cost: The cost of the inventory herein means the net value incurred to get the inventory ready for sale. Market value: Market value in the lower of cost or market approach is the cost of replacing, exchanging or substituting the inventory of the company. To Compute: 1. Lower of cost or market for inventory applied separately to each product. 2. Record LCM adjustment entry if required.

Question

Want to see the full answer?

Answer 1

Question

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

Chapter 5, Problem 5PSA

To determine

Inventory:

Inventory refers to the stock or goods which will be sold in the near future and thus is an asset for the company. It comprises of the raw materials which are yet to be processed, the stock which is still going through the process of production and it also includes completed products that are ready for sale. Thus inventory is the biggest and the important source of income and profit for the business.

Merchandise Inventory: Merchandise inventory is the one which is purchased from the manufacturer with the purpose to sell it to the third party. Wholesalers, retailers, or distributors are ones who indulge into purchasing the products at a lower price and selling them at a higher price so to earn profits.

Lower of cost or market: Lower of cost or market also known as LCM is an approach in which the inventory is recorded in the Balance Sheet at the cost of inventory or at the current market −the one with the lowest value.

Cost: The cost of the inventory herein means the net value incurred to get the inventory ready for sale.

Market value: Market value in the lower of cost or market approach is the cost of replacing, exchanging or substituting the inventory of the company.

To Compute: 1. Lower of cost or market for inventory applied separately to each product.
2. Record LCM adjustment entry if required.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Students have asked these similar questions

Problem 2 Cariveh Co. sells automotive supplies from 25 different locations in one country. Each branch has up to 30 staff working there, although most of the accounting systems are designed and implemented from the company's head office. All accounting systems, apart from petty cash, are computerised, with the internal audit department frequently advising and implementing controls within those systems. Cariveh has an internal audit department of six staff, all of whom have been employed at Cariveh for a minimum of five years and some for as long as 15 years. In the past, the chief internal auditor appoints staff within the internal audit department, although the chief executive officer (CEO) is responsible for appointing the chief internal auditor. The chief internal auditor reports directly to the finance director. The finance director also assists the chief internal auditor in deciding on the scope of work of the internal audit department. You are an audit manager in the internal…

For direct material assigned to job 22B?

Subject: general accounting

Answer 2

Question

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

Chapter 5, Problem 5PSA

To determine

Inventory:

Inventory refers to the stock or goods which will be sold in the near future and thus is an asset for the company. It comprises of the raw materials which are yet to be processed, the stock which is still going through the process of production and it also includes completed products that are ready for sale. Thus inventory is the biggest and the important source of income and profit for the business.

Merchandise Inventory: Merchandise inventory is the one which is purchased from the manufacturer with the purpose to sell it to the third party. Wholesalers, retailers, or distributors are ones who indulge into purchasing the products at a lower price and selling them at a higher price so to earn profits.

Lower of cost or market: Lower of cost or market also known as LCM is an approach in which the inventory is recorded in the Balance Sheet at the cost of inventory or at the current market −the one with the lowest value.

Cost: The cost of the inventory herein means the net value incurred to get the inventory ready for sale.

Market value: Market value in the lower of cost or market approach is the cost of replacing, exchanging or substituting the inventory of the company.

To Compute: 1. Lower of cost or market for inventory applied separately to each product.
2. Record LCM adjustment entry if required.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 3

Question

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

Chapter 5, Problem 5PSA

To determine

Inventory:

Inventory refers to the stock or goods which will be sold in the near future and thus is an asset for the company. It comprises of the raw materials which are yet to be processed, the stock which is still going through the process of production and it also includes completed products that are ready for sale. Thus inventory is the biggest and the important source of income and profit for the business.

Merchandise Inventory: Merchandise inventory is the one which is purchased from the manufacturer with the purpose to sell it to the third party. Wholesalers, retailers, or distributors are ones who indulge into purchasing the products at a lower price and selling them at a higher price so to earn profits.

Lower of cost or market: Lower of cost or market also known as LCM is an approach in which the inventory is recorded in the Balance Sheet at the cost of inventory or at the current market −the one with the lowest value.

Cost: The cost of the inventory herein means the net value incurred to get the inventory ready for sale.

Market value: Market value in the lower of cost or market approach is the cost of replacing, exchanging or substituting the inventory of the company.

To Compute: 1. Lower of cost or market for inventory applied separately to each product.
2. Record LCM adjustment entry if required.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 4

Question

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

Chapter 5, Problem 5PSA

To determine