H.T. Tan Company is preparing the annual financial statements dated December 31 of the current year. Ending inventory information about the five major items stocked for regular sale follows: Item Quantity on Hand 68 ENDING INVENTORY, CURRENT YEAR Unit Cost When Acquired (FIFO) Net Realizable Value (Market) at Year-End 98 28 $ 19 47 $ 22 7232 37 59 55 32 12 17 Required: Compute the valuation that should be used for the current year ending inventory using lower of cost or net realizable value applied on an item-by-item basis. ABCDE 88 368 Total Net Value Lower of Cost or NRV Item Quantity Total Cost Realizable 68 98 28 88 368 Total $ 0 $ 0 $ 0 ABCDE

Before discussing the topic inventory valuation let’s discuss the meaning of inventory. In accounting, inventory is also known as stock. Inventory means all the finished goods, materials, merchandise that a business holds for the purpose of selling it in…