Chapter 5 Inventories and Cost of Sales 267 Item Units Cost per Unit Market per Unit 3 Car audio equipment 4 Speakers 345 260 326 204 $ 90 $ 98 100 95 41 5 Stereos 6 Amplifiers 7 Subwoofers 52 8 Security equipment 9 Alarms 10Locks 11 Cameras 480 291 212 150 93 310 125 84 322 12 Binocular equipment 13 Tripods 14 Stabilizers 185 170 70 97 84 105 Required 1. Compute the lower of cost or market for the inventory applied separately to ach item. 2. If the market amount is less than the recorded cost of the inventory, then record the LCM adjustment Check (11 $273,054 to the Merchandise Inventory account. Navajo Company's financial statements show the following. The company recently discovered that in making physical counts of inventory. it had made the following errors: Inventory on December 31. 2016. is understated by $56,000 and inventory on December 31. 2017. is overstated by $20,000. Problem 5-6A Analysis of inventory e A2 For Year Ended December 31 2016 2017 2018 3. Compute the cost assigned to ending inventory using (a) FIFO, (b) LIFO, (o) weighted average, a (d) specific identification. (Round all amounts to cents.) 4. Compute gross profit earned by the company for each f the four costing methods in part 3 Analysis Component 5. If the company's manager earns a bonus based on a percentage of gross profit, which method of inver tory costing will the manager likely prefer? Problem 5-5A Lower of cost or market A physical inventory of Liverpool Company taken at December 31 reveals the following. P2 888 Fa F5 F6 F8 E9 3 4 5 6