Vasquez Paper Company has provided you with the following information regardingits inventory of paper for June and July. Vasquez uses a perpetual inventory system.

Instructionsa. Calculate the cost, the net realizable value, and the amount to be reported on the balance sheet forVasquez Paper Company?s inventory at (1) June 30 and (2) July 31.b. Prepare any journal entries required to record the LCNRV of the paper inventory at (1) June 30 and(2) July 31.c. Assume that during the month of August, the company did not purchase any additional paper inventory.Assume also that on August 31 it had 5,000 tonnes in inventory and the NRV per tonne was$720. Is an adjusting entry required at August 31? Explain. If so, prepare the adjusting entry.

d. What is Vasquez Paper Company required to disclose in its notes to the fi nancial statements withregard to LCNRV?Taking It Further Why is it important to report inventory at the LCNRV on the balance sheet?

Transcribed Image Text:

July 31 June 30 Paper inventory (in tonnes) Cost per tonne NRV per tonne 4,500 6,200 $560 $680 $650 $615