JBD, Inc. has the following information pertaining to it 2025 ending inventory. Requirements: Calculate the value of ending inventory using the following methods: LCM for each individual inventory item LCM for aggregated inventory. Record any necessary journal entries for each of the above methods, assuming the amount is material. Explain the purpose of applying the LCM rule to inventory Item Quantity Cost per Each Market Cost per Each Records Market LCM Each LCM Total R55 300 10 7.5 S49 150 15 12 T21 350 8 6 E33 600 33 35 Date Account Debit Credit
JBD, Inc. has the following information pertaining to it 2025 ending inventory.
Requirements:
- Calculate the value of ending inventory using the following methods:
- LCM for each individual inventory item
- LCM for aggregated inventory.
- Record any necessary
journal entries for each of the above methods, assuming the amount is material. - Explain the purpose of applying the LCM rule to inventory
-
Item Quantity Cost per Each Market Cost per Each Records Market LCM Each LCM Total R55 300 10 7.5 S49 150 15 12 T21 350 8 6 E33 600 33 35 Date Account Debit Credit
Lower of Cost or Market Value
The accounting principle known as lower of cost or market value (LCM) is used to estimate the worth of items on a firm's balance sheet. According to the LCM principle, inventory's value should be reported at the lower of its cost or market value. The projected selling price of a product in the regular course of business is referred to as market value. This price is determined by taking into consideration all pertinent elements, such as market circumstances and recent prices for comparable commodities. The cost of the inventory is made up of the purchase price as well as any additional expenses incurred to get the inventory to where it is now.
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