Question
Forester Company has five products in its inventory. Information about the December 31, 2021, inventory follows. Unit Unit Replacement Unit Selling Product Quantity Cost
Forester Company has five products in its inventory. Information about the December 31, 2021, inventory follows. Unit Unit Replacement Unit Selling Product Quantity Cost Cost Price A 900 $ 24 $26 $30 B 500 29 25 32 600 17 16 22 D 1,000 21 18 20 E 900 28 26 27 The cost to sell for each product consists of a 15 percent sales commission. The normal profit for each product is 25 percent of the selling price. Required: 1. Determine the carrying value of inventory at December 31, 2021, assuming the lower of cost or market (LCM) rule is applied to individual products. 2. Determine the carrying value of inventory at December 31, 2021, assuming the LCM rule is applied to the entire inventory. 3. Assuming inventory write-downs are common for Forester, record any necessary year-end adjusting entry based on the amount calculated in requirement 2.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started