A home improvement store, like Lowe’s, carries the following items: Inventory Items Quantity Unit Cost Unit NRV Hammers 100 $6.80 $7.30 Saws 50 9.80 8.80 Screwdrivers 130 1.80 2.40 Drills 40 24.80 21.60 One-gallon paint cans 160 5.30 4.80 Paintbrushes 180 5.80 6.30
A home improvement store, like Lowe’s, carries the following items: Inventory Items Quantity Unit Cost Unit NRV Hammers 100 $6.80 $7.30 Saws 50 9.80 8.80 Screwdrivers 130 1.80 2.40 Drills 40 24.80 21.60 One-gallon paint cans 160 5.30 4.80 Paintbrushes 180 5.80 6.30
Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
Chapter6: Cost Of Goods Sold And Inventory
Section: Chapter Questions
Problem 24CE: Inventory Costing: Average Cost Refer to the information for Filimonov Inc. and assume that the...
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A home improvement store, like Lowe’s, carries the following items:
Inventory Items | Quantity | Unit Cost | Unit NRV |
---|---|---|---|
Hammers | 100 | $6.80 | $7.30 |
Saws | 50 | 9.80 | 8.80 |
Screwdrivers | 130 | 1.80 | 2.40 |
Drills | 40 | 24.80 | 21.60 |
One-gallon paint cans | 160 | 5.30 | 4.80 |
Paintbrushes | 180 | 5.80 | 6.30 |
Required:
1. Compute the total cost of inventory.
2. Determine whether each inventory item would be reported at cost or net realizable value, and then place that unit amount in the “Lower of Cost and NRV per unit” column. Multiply the quantity of each inventory item by the appropriate cost or NRV unit amount and place the total in the “Total” column.
3. Record any necessary
4. Determine the financial statement effects of using lower of cost and net realizable value to report inventory.
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VIEWStep 2: (1) Compute the total cost of the entire inventory:
VIEWStep 3: (2) Determine whether each inventory item would be reported at cost or net realizable value:
VIEWStep 4: (3) Prepare necessary entry to write down inventory from cost to net realizable value:
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