Question

Exercise 6-9 Whispering Winds Corp. uses the lower-of-cost-or-market basis for its inventory. The following data are available at December 31. Units Cost per Unit Market per Unit Cameras Minolta 5 $180 $163 Canon 7 133 141 Light Meters Vivitar 11 125 112 Kodak 10 121 129 What amount should be reported on Whispering Winds Corp.’s financial statements, assuming the lower-of-cost-or-market rule is applied?

Answer 1

Answer:

Minolta: 5 at $ 163 = $   815

Canon:  7 at  $ 133 = $   931

Vivitar   11 at  $ 112 = $ 1,232

Kodak  10 at  $ 121 = $ 1,210  

Total Inventory:         $   4,188

Explanation:

We must value the inventory at the lower value between the historic cost and the market value of the assets. This is done to follow the conservatism principles of accounting.

Minolta: 5 at $ 163 = $   815

Canon:  7 at  $ 133 = $   931

Vivitar   11 at  $ 112 = $ 1,232

Kodak  10 at  $ 121 = $ 1,210  

Total Inventory:         $   4,188