ITT Inventory Write-Down Palmquist Company has five different inventory items and applies the inventory valuation rules on an individual item basis. The normal markup on all items is 20% of cost. The following information obtained from the company's record Item Units Cost Replacement Cost Net Realizable Value 500 $10.00 $ 9.10 $ 9.20 1 400 8.00 8.10 7.80 300 15.00 13.50 14.00 4 200 18.00 12.00 17.00 5 100 25.00 25.50 25.30 Required: 1. Assume that Palmquist uses the FIFO cost flow assumption. Compute the correct inventory value under the lower of cost or net realizable value rule. Round your answers to the nearest cent. Lower of Item Cost or NRV 1 %24 2 4 5 Compute the total inventory value if the lower of cost or net realizable value is applied to each individual item. 2. Assume that Palmquist uses the LIFO cost flow assumption. Compute the correct inventory value under the lower of cost or market rule. Round your answers to the nearest cent. Lower of Item Cost or Market 3 4 5 Compute the total inventory value if the lower of cost or market is applied to each individual item.
ITT Inventory Write-Down Palmquist Company has five different inventory items and applies the inventory valuation rules on an individual item basis. The normal markup on all items is 20% of cost. The following information obtained from the company's record Item Units Cost Replacement Cost Net Realizable Value 500 $10.00 $ 9.10 $ 9.20 1 400 8.00 8.10 7.80 300 15.00 13.50 14.00 4 200 18.00 12.00 17.00 5 100 25.00 25.50 25.30 Required: 1. Assume that Palmquist uses the FIFO cost flow assumption. Compute the correct inventory value under the lower of cost or net realizable value rule. Round your answers to the nearest cent. Lower of Item Cost or NRV 1 %24 2 4 5 Compute the total inventory value if the lower of cost or net realizable value is applied to each individual item. 2. Assume that Palmquist uses the LIFO cost flow assumption. Compute the correct inventory value under the lower of cost or market rule. Round your answers to the nearest cent. Lower of Item Cost or Market 3 4 5 Compute the total inventory value if the lower of cost or market is applied to each individual item.
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter8: Inventories: Special Valuation Issues
Section: Chapter Questions
Problem 2E: Inventory Write-Down Stiles Corporation uses the FIFO cost flow assumption and is in the process of...
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Transcribed Image Text:Inventory Write-Down
ITT
Palmquist Company has five different inventory items and applies the inventory valuation rules on an individual item basis. The normal markup on all items is 20% of cost. The following information is obtained from the company's records:
Item
Units
Cost
Replacement Cost
Net Realizable Value
1
500
$10.00
$ 9.10
$ 9.20
2
400
8.00
8.10
7.80
3
300
15.00
13.50
14.00
4
200
18.00
12.00
17.00
5
100
25.00
25.50
25.30
Required:
1. Assume that Palmquist uses the FIFO cost flow assumption. Compute the correct inventory value under the lower of cost or net realizable value rule. Round your answers to the nearest cent.
Lower of
Item
Cost or NRV
$
2.
3
4
Compute the total inventory value if the lower of cost or net realizable value is applied to each individual item.
$
2. Assume that Palmquist uses the LIFO cost flow assumption. Compute the correct inventory value under the lower of cost or market rule. Round your answers to the nearest cent.
Lower of
Item
Cost or Market
1
2.
3
4
Compute the total inventory value if the lower of cost or market is applied to each individual item.
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