Reference no: EM132464684

 Lower-of-cost-or-market.

• At 12/31/20. the end of Jenner Company's first year of business. inventory was 56.100 and 55.100 at cost and at market. respectively.

Following is data relative to the 12/31121 inventory of Jenner.

Item	Original Cost Per Unit		Net                                                                                        Net Realizable                 Appropriate Replacement                              Realizable                        Value Less                         Inventory Cost                                                    Value                       Normal Profit                           Value
A	5	.65	5	.45
B		.45		.40
C		.70		.75
D		.75		.65
E		.90		.85

Selling price is 51.00/unit for all items_ Disposal costs amount to 10% of selling price and a -normal' profit
is 30% of selling price. There are 1.500 units of each item in the 12/31/21 inventory.

Instructions

Question (a) Prepare the entry at 12/31/20 necessary to implement the lower-of-cost-or-market procedure assuming Jenner uses a contra account for its balance sheet

Question (b) Complete the last three columns in the 12/31/21 schedule above based upon the lower-of -rnct-or¬market rules_

Question (c) Prepare the entrynes) necessary at 12/31/21 based on the data above.

Question (d) How are inventory losses disclosed on the income statement?