Williams Inc. had the following balances and transactions during 2014: Beginning Inventory 20...
Question:
Williams Inc. had the following balances and transactions during 2014:
Beginning Inventory 20 units at $70
June 10 Purchased 30 units at $80
December 30 Sold 15 units
December 31 Replacement cost $60
The company maintains its records of inventory on a perpetual basis using the first-in, first-out method. Calculate the amount of ending Merchandise Inventory on December 31, 2014 using the lower-of-cost-or-market rule.
A) $2,450
B) $1,800
C) $2,100
D) $1,400
Valuation of inventory
The accounting standards require that inventory is valued at the lower of net realizable value or cost, using one of the recognized methods to determine cost price.
Answer and Explanation: 1
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View this answerUnits in ending inventory = 20 units + 30 units - 15 units = 35 units
Ending inventory valuation = Units in ending inventory * Replacement cost
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Net Realizable Value of Inventory: Definition & Method
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