Question

The following inventory information was taken from the records of Kleinfeld Inc. on December 31, 2020 Historical cost $12,000 Replacement cost $7,000 Expected selling Price $9,000 Expected selling cost $500 Normal profit margin 50% of price Assume that in February 2021, the expected selling price increases to $13,000 (all the rest of the facts are the same). What adjustment to inventory should be made under US GAAP in the preparation of the March 31, 2021 financial statements

Answer 1

Answer:

Inventory should be increased by $3,500

Step-by-step explanation:

Calculation to determine What adjustment to inventory should be made under US GAAP in the preparation of the March 31, 2021 financial statements

Adjustment to inventory =(13,000 - 9,000 )-500

Adjustment to inventory= 4,000 - 500 Adjustment to inventory=$3,500