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Best Deals, Inc. has 10 units in ending merchandise inventory on December 31. The units were purchased in November for $160 each. The price lists from suppliers indicate the current replacement cost of the item to be $162 each. What would be the amount reported as Merchandise Inventory on the balance sheet?

Respuesta :

Answer:

$1,600

Explanation:

According to the accounting principle, the inventory should be recorded at lower of cost or replacement cost.

Since the purchase units are $160 each

And, the replacement cost is $162 each

So, the lower cost is of purchase units i.e $160 each

And, the number of units in ending inventory is 10 units

SO, the amount recorded as Merchandise inventory is

= $160 × 10 units

= $1,600

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