Almaden Hardware Store sells two distinct types of products, tools

Almaden Hardware Store sells two distinct types of products, tools


ANSWER KEY P 9-2 Lower of cost or market

Almaden Hardware Store sells two distinct types of products, tools and paint products. Information pertaining to its 2011 year-end inventory is as follows:

Inventory, by product Type     Quality             Per unit Cost    Designated Market
Tools
     Hammers                            100                  $5.00               $5.50
     Saws                                   200                  10.00               9.00
     Screwdrivers                                   300                  2.00                 2.60
Paint products
1-      Gallon cans                    500                  6.00                 5.00
Paint brushes                                    100                  4.00                 4.50
           

Required:

1. Determine the balance sheet inventory carrying value at year-end, assuming the LCM rule is applied to (a) individual products, (b) product type, and (c) total inventory.

2. Assuming that the company recognizes an inventory write-down as a separate income statement item, for each of the LCM applications determine the amount of the loss


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