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10 July, 14:20

Mortenson Corporation sells its product, a rare metal, in a controlled market with a quoted price applicable to all quantities. The total cost of 5,000 pounds of the metal now held in inventory is $150,000. The total selling price is $420,000, and estimated costs of disposal are $15,000. At what amount should the inventory of 5,000 pounds be reported in the balance sheet

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  1. 10 July, 16:25
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    Answer:$405,000

    Explanation:

    The Inventory to be reported in the balance sheet is the Net realizable value of 5000 pounds.

    Net Realizable value = Selling price - disposal Cost

    = $420,000 - $15,000

    = $405,000

    The inventory of 5,000pounds should be recorded in the balance sheet as $405,000 since it is a controlled market price applicable for all quantities.
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