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Almaden Hardware Store sells two product categories, tools and paint products. Information pertaining to its 2018...

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Accounting

Almaden Hardware Store sells two product categories, tools andpaint products. Information pertaining to its 2018 year-endinventory is as follows:

Inventory,
by Product Category		QuantityPer Unit
Cost		Net Realizable Value
Tools:
Hammers110$5.70$6.20
Saws27010.709.70
Screwdrivers3702.703.30
Paint products:
1-gallon cans5706.705.70
Paint brushes1104.705.20


Required:
1. Determine the carrying value of inventory atyear-end, assuming the lower of cost or net realizable value(LCNRV) rule is applied to (a) individual products, (b) productcategories, and (c) total inventory.

Lower of cost and NRV
NetByBy
RealizableIndividualProductBy Total
ProductCostValueProductsTypeInventory
Tools:
Hammers
Saws
Screwdrivers
Total tools$0$0
Paint products:
1-gallon cans
Paint brushes
Total paint$0$0
Total$0$0$0$0

2.

Assuming that the company reports an inventory write-down as aline item in the income statement, for each of the LCNRVapplications determine the amount of the loss.

(a)Individual products
(b)Product categories
(c)Total inventory

Answer & Explanation Solved by verified expert
3.7 Ratings (413 Votes)

1 Cost Net Realizable Value By Individual Products By Product Type By Total Inventory
Product
Tools:
Hammers $        627 $                   682 $           627
Saws $    2,889 $               2,619 $       2,619
Screwdrivers $        999 $               1,221 $           999
Total tools $    4,515 $               4,522 $     4,515
Paint Products:
1 - gallon cans $    3,819 $               3,249 $       3,249
Paint brushes $        517 $                   572 $           517
Total paint $    4,336 $               3,821 $     3,821
Total $    8,851 $               8,343 $       8,011 $     8,336 $       8,343
2
(a) Individual Products = $                   840
(b) Product Categories = $                   515
(c) Total Inventory = $                   508
Workings:
Quantity Per unit cost Cost Net Realizable Value per unit Net Realizable Value
(i) (ii) (i) X (ii) (iii) (i) X (iii)
Tools:
Hammers 110 $                 5.70 $           627 $       6.20 $           682
Saws 270 $               10.70 $       2,889 $       9.70 $       2,619
Screwdrivers 370 $                 2.70 $           999 $       3.30 $       1,221
1 - gallon cans 570 $                 6.70 $       3,819 $       5.70 $       3,249
Paint brushes 110 $                 4.70 $           517 $       5.20 $           572
2
(a) Individual Products = $8851 - $8011 = $        840
(b) Product Categories = $8851 - $8336 = $        515
(c) Total Inventory = $8851 - $8343 = $        508

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