Question

​Kim's Retail had 800 units of inventory on hand at the end of the year. These were recorded at a cost of $ 13 each using the lastminus​in, firstminusout ​(LIFO) method. The current replacement cost is $ 9 per unit. The selling price charged by​ Kim's Retail for each finished product is $ 15. In order to record the adjusting entry needed under the lowerminusofminuscostminusorminusmarket ​rule, the Merchandise Inventory will be​ ________.

Answer 1

the Merchandise Inventory will be credited by $3200

Step-by-step explanation:

given data

Retail inventory = 800 units

recorded cost = $13

replacement cost = $ 9 per unit

selling price charged = $15

to find out

the Merchandise Inventory will be

solution

we know here market is equal to current replacement cost that is $9

and here we can say

market is here less than cost

so inventory will be valued at Market

so we find

down in inventory is = 800 × ( 13 - 9 )

down in inventory is = 3200

so the Merchandise Inventory will be credited by $3200