Question

A company reports inventory using the lower of cost and net realizable value. Below is information related to its year-end inventory: Inventory Quantity Cost NRV Unit A 15 $ 37 $ 39 Unit B 23 45 42 Unit C 17 28 32 Unit D 20 14 13 a. Calculate ending inventory under the lower of cost and net realizable value.

Answer 1

$2,257

Step-by-step explanation:

Generally Acceptable Accounting Principles requires that the closing inventory should be valued at

Lower of

• cost
• Net realizable value

Valuation Table

Inventory Quantity Cost NRV Inventory Value (Lower)

Unit A 15 $37 $39 $37 x 15 = $555

Unit B 23 $45 $42 $42 x 23 = $966

Unit C 17 $28 $32 $28 x 17 = $476

Unit D 20 $14 $13 $13 x 20 = $260

Total Value of Inventory $2,257