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Tatum Company has four products in its inventory. Information about the December 31, 2021, inventory is as follows: Product Total Cost Total Net Realizable Value 101 $ 136,000 $ 108,000 102 99,000 118,000 103 68,000 58,000 104 38,000 58,000
Required:
1. Determine the carrying value of inventory at December 31, 2021, assuming the lower of cost or net realizable value (LCNRV) rule is applied to individual products.
2. Assuming that inventory write-downs are common for Tatum Company, record any necessary year-end adjusting entry.

Respuesta :

anthougo

Answer:

Tatum Company

1. The carrying value of inventory at December 31, 2021, assuming the LCNRV rule is applied to individual products is:

=  $ 303,000

2. Adjusting Journal Entry:

Debit Cost of Goods Good $38,000

Credit Inventory $38,000

To write-down the value of ending inventory.

Explanation:

a) Data and Calculations:

Product   Total Cost     Total Net Realizable Value    LCNRV

101            $ 136,000        $ 108,000                           $ 108,000

102               99,000             118,000                               99,000

103               68,000             58,000                                58,000

104               38,000             58,000                                38,000

Total        $ 341,000       $ 342,000                          $ 303,000

Write-down:

Cost of inventory =    $341,000

LCNRV of inventory    303,000

Inventory write-down $38,000

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