Question

he inventory of Coronado Company on December 31, 2020, consists of the following items. Part Quantity Cost per Unit Net Realizable Value 110 620 $117.00 $123.00 111 920 73.80 64.00 112 530 98.40 93.00 113 190 209.10 221.40 120 370 252.00 256.00 121 a 1,700 20.00 1.00 122 330 295.20 289.00 a Part No. 121 is obsolete and has a realizable value of $1.00 each as scrap. (a) Determine the inventory as of December 31, 2020, by the LCNRV method, applying this method to each item. Inventory as of December 31, 2020 $enter the Inventory as of December 31 in dollars (b) Determine the inventory by the LCNRV method, applying the method to the total of the inventory. Inventory as of December 31, 2020

Answer 1

a. $410,749

b. $ 418,286

Step-by-step explanation:

Given;

Part Quantity Cost per Unit Net Realizable Value Carrying amount

110 620 $117.00 $123.00 $117.00

111 920 $73.80 $64.00 $64.00

112 530 $98.40 $93.00 $93.00

113 190 $209.10 $221.40 $209.10

120 370 $252.00 $256.00 $252.00

121 a 1,700 $20.00 $1.00 $1

122 330 $295.20 $289.00 $289.00

The cost or net realizable value of inventory requires that inventory should not be carried at an amount higher than the net realizable value. this is due to the fact that inventory is initially recognized by cost.

Applying the LCNRV method to each item Inventory as of December 31, 2020

= 620 * 117 + 920 * 64 + 530 * 93 + 190 * 209.10 + 370 * 252 + 1700 * 1 + 330 * 289

= $410,749

Applying the LCNRV method to the total of the inventory. Inventory as of December 31, 2020

= 620 * 117 + 920 * 73.8 + 530 * 98.4 + 190 * 209.10 + 370 * 252 + 1700 * 20 + 330 * 295.2

= $456,973

and

= 620 * 123 + 920 * 64 + 530 * 93 + 190 * 221.40 + 370 * 256 + 1700 * 1 + 330 * 289

= $ 418,286