Refer to the financial information in S6-5

Required:

Analyze the financial information to identify three observations that lead to concerns that the inventory will need to be written down to comply with the LCM/NRV rule.

S6-5 (Chapter 6)

Merchandise Mavens Corporation sells goods throughout North America. One of its product lines has recently reported the following information to you at head office. Based on this information, you have become concerned that the company is experiencing difficulties selling the product.

Transcribed Image Text:

2018 2017 2016 Cost of Goods Sold $375,000 $358,000 $334,000 Gross Sales Revenue 400,000 400,000 400,000 Inventory 56,410 34,000 29,425 Sales Returns and Allowances 10,000 2,000 3,000