Homework SourseSandals Company is preparing the annual financial statements
Sandals Company is preparing the annual financial statements dated December 31. Ending inventory information about the four major items stocked for regular sale follows:
Compute the amount that should be reported for the ending inventory using the LCM rule applied to each item.
How will the write-down of inventory to lower of cost or market affect the company’s expenses reported for the year ended December 31?
| Sandals Company is preparing the annual financial statements dated December 31. Ending inventory information about the four major items stocked for regular sale follows: |
Solution
1) Compute the amount that should be reported for the ending inventory using the LCM rule applied to each item.
2) Journal entry :
| Cost | Market value | Value under LCM | |
| Air flow | 450 | 510 | 450 |
| Blister buster | 3060 | 2880 | 2880 |
| Coolonite | 2240 | 2080 | 2080 |
| Dudesly | 600 | 725 | 600 |
| Total | 6350 | 6195 | 6010 |
