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Forester Company has five products in its inventory. Information about the December 31, 2021, inventory follows. Product Quantity Unit Cost Unit Replacement Cost Unit Selling Price A 800 $ 13 $ 15 $ 19 B 600 18 14 21 C 500 6 5 11 D 900 10 7 9 E 600 17 15 16 The...

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Accounting

Forester Company has five products in its inventory. Informationabout the December 31, 2021, inventory follows.

ProductQuantityUnit
Cost		Unit
Replacement
Cost		Unit
Selling
Price
A800$13$15$19
B600181421
C5006511
D9001079
E600171516


The cost to sell for each product consists of a 20 percent salescommission. The normal profit for each product is 30 percent of theselling price.

Required:
1. Determine the carrying value of inventory atDecember 31, 2021, assuming the lower of cost or market (LCM) ruleis applied to individual products.

Determine the carrying value of inventory at December 31, 2021,assuming the lower of cost or market (LCM) rule is applied toindividual products. (Do not round intermediate calculations.)

Product (units)RCNRVNRV-NPMarketCostInventory carrying value
A (800)$12,000
B (600)8,400
C (500)2,500
D (900)6,300
E (600)9,000
Total$0$0$0

Answer & Explanation Solved by verified expert
3.6 Ratings (289 Votes)

Solution:
CALCULATION OF INVENTORY VALUE AS PER LOWER OF COST OR NET REALIZABLE VALUE
PRODUCT Quantity (A) Purchase Cost Per Unit Net Realizable Value Cost of Ivnentory lower of Cost or Net Realizable Value (B) Inventory Carrying Value (AXB)
A 800 $                 13.00 $                        15.00 $                              13.00 $          10,400
B 600 $                 18.00 $                        14.00 $                              14.00 $            8,400
C 500 $                   6.00 $                           5.00 $                                5.00 $            2,500
D 900 $                 10.00 $                           7.00 $                                7.00 $            6,300
E 600 $                 17.00 $                        15.00 $                              15.00 $            9,000
Total   $          36,600

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