Question

If a company values inventory at the lower of cost or market, which of the following is the value of merchandise inventory on the balance sheet? Apply the lower-of-cost-or-market method to inventory as a whole. Item Inventory Quantity Unit Cost Price Unit Market Price Product C 420 $ 6 $ 5 Product D 370 12 14 a.$7,280 b.$6,540 c.$6,960 d.$7,700

Answer 1

Answer:

merchandise inventory on the balance sheet 6,540 option B

Explanation:

we should eevaluate between cost or market price, the lowest.

Product C

cost:     6

market: 5

we will use $5 so 420 units x 5 dollars =  $  2,100

Product D

cost:     12

market: 14

we will use $12 so 370 units x 12 dollars = $  4,440‬

Total merchandise: product C 4,440 + product D 2,100 = 6,540