Answer:
The ending inventory under the lower of cost and net realizable value is 5100.
Explanation:
Ending inventory = (140*27) + (60*22)
= 5100
Therefore, The ending inventory under the lower of cost and net realizable value is 5100.
Answer:
Total Ending Inventory of $5,100 should be reported in the accounts, based on the principle of Lower of Cost or Net Realizable Value
Explanation:
Based on Lower of Cost or Net Realizable Value (NRV) principle, Inventory of Item A should be reported on Cost ($27) as it is lower than the NRV ($32) and Inventory of Item B should be reported on NRV ($22) as it is lower than its Cost ($32). Calculation of Ending Inventory is presented below in tabular form:
Inventory Lower of Quantity Cost Total Amount
Cost or NRV (Quantity * Cost)
A Cost 140 $27 $3,780
B NRV 60 $22 $1,320
Total Ending Inventory $5,100
