Question

Exercise 6-9 Whispering Winds Corp. uses the lower-of-cost-or-market basis for its inventory. The following data are available at December 31. Units Cost per Unit Market per Unit Cameras Minolta 5 $180 $163 Canon 7 133 141 Light Meters Vivitar 11 125 112 Kodak 10 121 129 What amount should be reported on Whispering Winds Corp.’s financial statements, assuming the lower-of-cost-or-market rule is applied?

Answer 1

Minolta: 5 at $ 163 = $ 815

Canon: 7 at $ 133 = $ 931

Vivitar 11 at $ 112 = $ 1,232

Kodak 10 at $ 121 = $ 1,210

Total Inventory: $ 4,188

Step-by-step explanation:

We must value the inventory at the lower value between the historic cost and the market value of the assets. This is done to follow the conservatism principles of accounting.

Minolta: 5 at $ 163 = $ 815

Canon: 7 at $ 133 = $ 931

Vivitar 11 at $ 112 = $ 1,232

Kodak 10 at $ 121 = $ 1,210

Total Inventory: $ 4,188