Intermediate Accounting, 10 Ed
10th Edition
ISBN: 9781260310177
Author: Mark W. Nelson, Wayne B. Thomas J. David Spiceland
Publisher: McGraw-Hill Education
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Chapter 9, Problem 9.4E
Lower of cost or market
• LO9–1
[This is a variation of E 9–1, modified to focus on the lower of cost or market.] Herman Company has three products in its ending inventory. Specific per unit data at the end of the year for each of the products are as follows:
Required:
What unit values should Herman use for each of its products when applying the lower of cost or market (LCM) rule to ending inventory?
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toring Enabled Ex
A company has the following products in its ending inventory Compute lower of cost or market for inventory applied separately to each product and then
calculate the total lower of cost or market. What is the total lower of cost or market?
Product
Product A
Product 3
Product C
Mugle Choice
Quantity
10
$31.660
OSUN
15
20
Cost per
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$708
$508
$658
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4
PA4. LO 10.3 Calculate the cost of goods sold dollar value for A74 Company for the sale on
March 11, considering the following transactions under three different cost allocation methods
and using perpetual inventory updating. Provide calculations for (a) first-in, first-out (FIFO); (b)
last-in, first-out (LIFO); and (c) weighted average (AVG).
Number of Units
Unit Cost
Beginning inventory Mar. 1
Purchased Mar. 8
Sold Mar. 11 for $120 per unit
110
140
$87
89
95
Solution
А.
Number of Units
Dollar per Unit
Value
Cost of goods sold
В.
Number of Units
Dollar per Unit
Value
Cost of goods sold
C.
Number of Units
Dollar
per
Unit
Value
Cost of goods sold
PA5. LO 10.3 Use the first-in, first-out (FIFO) cost allocation method, with perpetual inventory
updating, to calculate (a) sales revenue, (b) cost of goods sold, and c) gross margin for A75
Company, considering the following transactions.
Number
Unit
Cost
of Units
Beginning inventory
Purchased Mar. 2
Sold Mar, 31 for $75 per unit
105
150
88…
S
At the end of the year, Randy's Parts Company had the following items in inventory:
Item
P1
Quantity
60
P2
40
P3
80
P4
70
Required
Unit Cost Unit Market Value
$ 85
70
130
125
$ 90
72
a. Determine the amount of ending inventory using the lower-of-cost-or-market rule applied to each individual inventory item.
b. Provide the adjustment necessary to write down the inventory based on Requirement a. Assume that Randy's Parts Co. uses the
perpetual inventory system.
c. Determine the amount of ending inventory, assuming that the lower-of-cost-or-market rule is applied to the total inventory in
aggregate.
120
130
d. Provide the adjustment necessary to write down the inventory based on Requirement c. Assume that Randy's Parts Co. uses the
perpetual inventory system.
Required A Required B Required C
Ending inventory
Complete this question by entering your answers in the tabs below.
Required D
Determine the amount of ending inventory using the lower-of-cost-or-market rule applied to each…
Chapter 9 Solutions
Intermediate Accounting, 10 Ed
Ch. 9 - Explain the (a) lower of cost or net realizable...Ch. 9 - What are the various levels of aggregation to...Ch. 9 - Describe the alternative approaches for recording...Ch. 9 - Explain the gross profit method of estimating...Ch. 9 - The Rider Company uses the gross profit method to...Ch. 9 - Explain the retail inventory method of estimating...Ch. 9 - Both the gross profit method and the retail...Ch. 9 - Define each of the following retail terms: initial...Ch. 9 - Explain how to estimate the average cost of...Ch. 9 - Prob. 9.10Q
Ch. 9 - Explain the LIFO retail inventory method.Ch. 9 - Discuss the treatment of freight-in, net markups,...Ch. 9 - Explain the difference between the retail...Ch. 9 - Prob. 9.14QCh. 9 - Prob. 9.15QCh. 9 - Explain the accounting treatment of material...Ch. 9 - Identify any differences between U.S. GAAP and...Ch. 9 - (Based on Appendix 9) Define purchase commitments....Ch. 9 - (Based on Appendix 9) Explain how purchase...Ch. 9 - Lower of cost or net realizable value LO91 Ross...Ch. 9 - Lower of cost or net realizable value LO91 SLR...Ch. 9 - Lower of cost or market LO91 [This is a variation...Ch. 9 - Lower of cost or market LO91 [This is a variation...Ch. 9 - Prob. 9.5BECh. 9 - Gross profit method; solving for unknown LO92...Ch. 9 - Retail inventory method; average cost LO93 Kiddie...Ch. 9 - Retail inventory method; LIFO LO93 Refer to the...Ch. 9 - Conventional retail method LO94 Refer to the...Ch. 9 - Conventional retail method LO94 Roberson...Ch. 9 - Lower of cost or net realizable value LO91 Herman...Ch. 9 - Lower of cost or net realizable value LO91 The...Ch. 9 - Lower of cost or market LO91 [This is a variation...Ch. 9 - Lower of cost or market LO91 [This is a variation...Ch. 9 - Prob. 9.11ECh. 9 - Concepts; terminology LO91 through LO97 Listed...Ch. 9 - Prob. 9.1PCh. 9 - Prob. 9.3PCh. 9 - Prob. 9.8PCh. 9 - Prob. 9.1DMPCh. 9 - Prob. 9.3DMPCh. 9 - Prob. 9.4DMPCh. 9 - Prob. 9.5DMPCh. 9 - Prob. 9.6DMPCh. 9 - Prob. 9.7DMPCh. 9 - Real World Case 98 Various inventory issues;...Ch. 9 - Prob. 9.9DMPCh. 9 - Judgment Case 910 Inventory errors LO97 Some...Ch. 9 - Prob. 9.12DMPCh. 9 - Prob. 2CCTC
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