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10 May, 01:18

Jones Retail. had the following balances and transactions during 2017:

The company maintains its records of inventory on a perpetual basis using the first-in, first-out inventory costing method. Calculate the amount of ending Merchandise Inventory on December 31, 2017 using the lower-of-cost-or-market rule.

Supporting Materials

15 unitsat $75 Purchased 35 units at $84 Sold 25 units Replacement cost $65 Beginning Inventorr une December December 31 30

A $2,275

B $1,625

C $1,875

D $1,125

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Answers (1)
  1. 10 May, 03:35
    0
    B $1,625

    Explanation:

    The computation of the ending inventory based on the lower-of-cost-or-market value is shown below:

    The ending inventory units = Beginning inventory + purchase of inventory - selling units

    = 15 units + 35 units - 25 units

    = 25 units

    So, the cost of ending inventory = ending inventory units * purchase price

    = 25 units * $84

    = $2,100

    And, the market value equal to

    = ending inventory units * replacement cost

    = 25 units * $65

    = $1,625

    Based on the lower-of-cost-or-market value, the ending inventory would be $1,625
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