1.

Lower of Cost or Net Realizable Value (LCNRV) Rule

Determine the proper total inventory value for each of the following items in Erik Companys ending inventory: a. Erik has 700 rolls of camera film that have become obsolete with the advent of digital cameras. The films cost $3.30 each and are normally sold for $6.60. To clear out these old films, Erik will drop their selling price to $1.98. There are no related selling costs. b. Erik has four cameras in stock that have been used as demonstration models. The cameras cost $760 and normally sell for $960. Because these cameras are in used condition, Erik has set the selling price at $720 each. Expected selling costs are $20 per camera. New models of the camera, already on order, will cost Erik $800 and will sell for $1,040.

	Final inventory value
a.	Answer
b.	Answer

2.

Inventory Turnover and Days Sales in Inventory

The Northern Company installed a new inventory management system at the beginning of Year 1. Shown below are data from the companys accounting records as reported by the new system:

	Year 1	Year 2
Sales revenue	$27,000,000	$33,000,000
Cost of goods sold	15,000,000	17,700,000
Beginning inventory	1,200,000	1,260,000
Ending inventory	1,260,000	1,400,000

Calculate the companys (a) inventory turnover and (b) days sales in inventory for both years. Round to two decimals. Use the rounded answers in your calculations.

	Year 1	Year 2
(a) Inventory turnover	Answer	Answer
(b) Days' sales in inventory	Answer	Answer