Question

Wood Company had the following inventory items on hand at the end of the year. Computing the lower of cost or net realizable value on an item-by-item basis, determine what amount would be reported on the balance sheet for inventory.

Quantity Cost per item Net realizable value per item Lower of cost or market Reported on the balance sheet
Item A 80 $87 $102
Item B 40 62 57
Total

Answer 1

$9,240

Step-by-step explanation:

Calculation for the amount that would be reported on the balance sheet for inventory

Using this formula

Quantity* Lower of cost or market= Amount to

be Reported on balance sheet

Let plug in the formula

Item A 80 *$87 =$6,960

Item B 40* 57=$2,280

Total $9,240

($6,960+$2,280)

Therefore the amount that would be reported on the balance sheet for inventory will be $9,240