Tatum Company has four products in its inventory. Information about ending inventory is as follows:
| Product | Total Cost | Total Net Realizable Value |
| 101 | $ 154,000 | $ 117,000 |
| 102 | 111,000 | 127,000 |
| 103 | 77,000 | 67,000 |
| 104 | 47,000 | 67,000 |
Required:
- Determine the carrying value of ending inventory assuming the lower of cost or net realizable value (LCNRV) rule is applied to individual products.
- Assuming that inventory write-downs are common for Tatum Company, record any necessary year-end adjusting entry.
The inventory of Royal Decking consisted of five products. Information about ending inventory is as follows:
| Product | Per Unit | |||||
| Cost | Replacement Cost | Selling Price | ||||
| A | $ 57 | $ 52 | $ 77 | |||
| B | 97 | 87 | 117 | |||
| C | 57 | 72 | 97 | |||
| D | 117 | 87 | 147 | |||
| E | 37 | 45 | 47 | |||
Selling costs consist of a sales commission equal to 15% of selling price and shipping costs equal to 5% of cost. The normal profit is 40% of selling price.
Required:
What unit value should Royal Decking use for each of its products when applying the lower of cost or market (LCM) rule to units of ending inventory?
Note: Do not round intermediate calculations. Round final answers to 2 decimal places.
On November 21, 2024, a fire at Hodge Company’s warehouse caused severe damage to its entire inventory of Product Tex. Hodge estimates that all usable damaged goods can be sold for $13,000. The following information was available from the records of Hodge’s periodic inventory system:
| Inventory, November 1, 2024 | $ 105,000 |
| Net purchases from November 1, to the date of the fire | 141,000 |
| Net sales from November 1, to the date of the fire | 221,000 |
Based on recent history, Hodge’s gross profit ratio on Product Tex is 40% of net sales.
Required:
Calculate the estimated loss on the inventory from the fire, using the gross profit method.
San Lorenzo General Store uses a periodic inventory system and the retail inventory method to estimate ending inventory and cost of goods sold. The following data are available for the month of October:
| Cost | Retail | |
| Beginning inventory | $ 38,000 | $ 53,000 |
| Net purchases | 13,270 | 31,900 |
| Net markups | 1,500 | |
| Net markdowns | 950 | |
| Net sales | 35,000 |
Required:
Complete the table below to estimate the average cost of ending inventory and cost of goods sold for October using the information provided.
Note: Round ratio calculation to 2 decimal places (i.e., 0.1234 should be entered as 12.34%.). Enter amounts to be deducted with a minus sign.
On January 1, 2024, the Brunswick Hat Company adopted the dollar-value LIFO retail method. The following data are available for 2024:
| Cost | Retail | |
| Beginning inventory | $ 80,620 | $ 139,000 |
| Net purchases | 125,000 | 254,000 |
| Net markups | 9,000 | |
| Net markdowns | 13,000 | |
| Net sales | 221,000 | |
| Retail price index, 12/31/2024 | 1.05 |
Required:
Calculate the estimated ending inventory and cost of goods sold for 2024 using the information provided.
Note: Do not round intermediate calculations.
Home Stop sells two product categories, furniture and accessories. Information pertaining to its year-end inventory is as follows:
| Inventory, by Product Category | Quantity | Per Unit Cost | Market |
| Furniture: | |||
| Chairs | 80 | $ 45 | $ 51 |
| Desks | 60 | 93 | 78 |
| Tables | 20 | 104 | 112 |
| Accessories: | |||
| Rugs | 30 | 80 | 68 |
| Lamps | 40 | 42 | 38 |
Required:
- Determine the carrying value of inventory at year-end, assuming the lower of cost or market (LCM) rule is applied to (a) individual products, (b) product categories, and (c) total inventory.
- Assuming inventory write-downs are common for Home Stop, record any necessary year-end adjusting entry for each of the LCM applications in requirement 1.