Question

Sohnson Corporation has the following inventory items: Calculate the Lower of Cost or Market for Johnson using whole-company analysis. a. ( $ 71,000 ) b. ( $ 69,300 ) c. ( $ 66,900 ). d. ( $ 67.500 )

Answer 1

The Lower of Cost or Market (LCM) rule is used to determine the value of inventory on a company's balance sheet. To calculate the LCM for Johnson using whole-company analysis, we need to compare the market value of the inventory items to their cost. The lowest value among the options given would be the LCM.

Step-by-step explanation:

The Lower of Cost or Market (LCM) rule is used to determine the value of inventory on a company's balance sheet. It states that if the market value of inventory is lower than its cost, the inventory should be written down to its market value.

In this case, the options given are:

• a. ($71,000)
• b. ($69,300)
• c. ($66,900)
• d. ($67,500)

To calculate the LCM for Johnson using whole-company analysis, we need to compare the market value of the inventory items to their cost. The lowest value among the options given would be the LCM.

For example, if the market value of Johnson's inventory is $71,000, but its cost is $66,900, then the LCM would be $66,900. Therefore, option c. ($66,900) would be the Lower of Cost or Market value for Johnson.