Question

Alfalfa Company developed the following information about its inventories in applying the lower-of-cost-or-market (LCM) basis in valuing inventories:

Product Cost Market
A $110,000 $120,000
B 80,000 76,000
C 155,000 162,000
If Alfalfa applies the LCM basis, the value of the inventory reported on the balance sheet would be:

a. $341,000.

b. $345,000.

c. $358,000.

d. $362,000.

Answer 1

a. $341,000.

Step-by-step explanation:

As we know that the inventory should be valued at cost or market value whichever is lower and the same is shown below:

Product Cost Market Lower value of cost or market

A $110,000 $120,000 $110,000

B $80,000 $76,000 $76,000

C $155,000 $162,000 $155,000

Value of the inventory $341,000