Question

Mortenson Corporation sells its product, a rare metal, in a controlled market with a quoted price applicable to all quantities. The total cost of 5,000 pounds of the metal now held in inventory is $150,000. The total selling price is $420,000, and estimated costs of disposal are $15,000. At what amount should the inventory of 5,000 pounds be reported in the balance sheet

Answer 1

Answer:$405,000

Step-by-step explanation:

The Inventory to be reported in the balance sheet is the Net realizable value of 5000 pounds.

Net Realizable value = Selling price - disposal Cost

= $420,000 - $15,000

= $405,000

The inventory of 5,000pounds should be recorded in the balance sheet as $405,000 since it is a controlled market price applicable for all quantities.