Determine the carrying value of inventory at december

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Question - Forester Company has five products in its inventory. Information about the December 31, 2021, inventory follows.

Product

Quantity

Unit Cost

Unit Replacement Cost

Unit Selling Price

A

500

$18

$20

$24

B

800

23

19

26

C

700

11

10

16

D

800

15

12

14

E

700

22

20

21

The cost to sell for each product consists of a 10 percent sales commission. The normal profit for each product is 40 percent of the selling price.

Required -

1. Determine the carrying value of inventory at December 31, 2021, assuming the lower of cost or market (LCM) rule is applied to individual products.

2. Determine the carrying value of inventory at December 31, 2021, assuming the LCM rule is applied to the entire inventory.

3. Assuming inventory write-downs are common for Forester, record any necessary year-end adjusting entry based on the amount calculated in requirement 2.

Reference no: EM133047959

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