Lower cost or market value

Question

Sadowski Video Center accumulates the following cost and market data at December 31.

Inventory Categories               Cost Data            Market Data

Cameras                                 $10,007                    $11,067
Camcorders                              8,702                        9,002
DVDs                                       11,073                        9,773

Compute the lower-of-cost-or-market valuation for Sadowski inventory.

The lower-of-cost-or-market value $

Entry field with incorrect answer now contains modified data

I am also having problems with figuring this out as well.

 

Thank you,

Shawna

Answer 1

 

                                                                                                                 Lower of cost

                                             Cost Data            Market DataCameras               or Market              

Inventory Categories                 $10,007                    $11,067                         $10,007
Camcorders                                 8,702                        9,002                           8,702
DVDs                                        11,073                        9,773                           9,773

 

Inventory Value                      29,782                         29,842                          28,482

 

Adjusting Entry:

 

Cost of Goods Sold                1,300

    Inventory                                     1,300

 

Since value of inventory (28,482) is less than recorded inventory amount (29,782), you must reduce the carrying amount of the inventory. You do this by increasing COGS (debit) and decreasing inventory (credit)