Business, 12.03.2021 15:30 dm0321545

by Product Category Quantity Per Unit Cost Net Realizable Value Tools: Hammers 100 $ 4.80 $ 5.30 Saws 180 9.80 8.80 Screwdrivers 280 1.80 2.40 Paint products: 1-gallon cans 480 5.80 4.80 Paint brushes 100 3.80 4.30 Required: 1. Determine the carrying value of inventory at year-end, assuming the lower of cost or net realizable value (LCNRV) rule is applied to (a) individual products, (b) product categories, and (c) total inventory. 2. Assuming inventory write-downs are common for Almaden, record any necessary year-end adjustment amount for each of the LCNRV applications in requirement 1.

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Answer from: Tyrant4life

Almaden

1. The carrying value of inventory at year-end, assuming the lower of cost or market (LCM) rule is applied to:

(a) individual products = $5,252

(b) product categories = $5,520

2. Adjusting Journal Entries:

a) by individual products:

Debit Cost of goods sold $1,640

Credit Inventory $1,640

To record the inventory write-down.

b) by category:

Debit Cost of goods sold $1,372

Credit Inventory $1,372

To record the inventory write-down.

c) by total inventory:

Debit Cost of goods sold $1,371

Credit Inventory $1,371

To record the inventory write-down.

Explanation:

a) Data and Calculations:

Inventory,

by Product Category Quantity Per Unit Cost Market LCM

Tools:

Hammers 100 $4.80 $5.30 $480 ($4.80*100)

Saws 180 9.80 8.80 $1,584 ($8.80*180)

Screwdrivers 280 1.80 2.40 $504 ($1.80*280)

Paint products:

1-gallon cans 480 5.80 4.80 $2,304 ($4.80*480)

Paint brushes 100 3.80 4.30 $380 ($3.80*100)

Total value of inventory (by individual products) = $5,252

by Category:

Tools:

at Cost (100 * $4.80 + 180 * $9.80 + 280 * $1.80) = $3,728

at Market value (100 * $5.30 + 180 * $8.80 + 280 * $2.40) = $2,786

Paint products:

at Cost (480 * $5.80 + 100 * $3.80) = $3,164

at Market value (480 * $4.80 + 100 * $4.30) = $2,734

Total inventory value = $5,520 ($2,786 + $2,734)

by total inventory:

Tools: at cost (100 * $4.80 + 180 * $9.80 + 280 * $1.80) = $3,728

Paint products: at cost (480 * $5.80 + 100 * $3.80) = $3,164

Total = $6,892 ($3,728 + $3,164)

Paint products: at Market value (100 * $5.30 + 180 * $8.80 + 280 * $2.40) = $2,786

Paint products: at Market value ((480 * $4.80 + 100 * $4.30) = $2,734

Total inventory value = $5,521 ($2,786 + $2,735)

Market value is selected since the total is less than the total cost.

The cost of inventory = $6,892

LCM by individual products = $5,252

Write-down = $1,640

The cost of inventory = $6,892

LCM by category = $5,520

Write-down = $1,372

The cost of inventory = $6,892

LCM by total inventory = $5,521

Write-down = $1,371

Answer from: Quest

i would say their habit of breaking down.

Answer from: Quest

u = 30

continuing your method

$\frac{1}{10}$ = $\frac{1}{u}$ + $\frac{1}{15}$

subtract $\frac{1}{15}$ from both sides

$\frac{1}{u}$ = $\frac{1}{10}$ - $\frac{1}{15}$ thus

$\frac{1}{u}$ = $\frac{3}{30}$ - $\frac{2}{30}$

$\frac{1}{u}$ = $\frac{1}{30}$ ⇒ u = 30

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