Problem 6-5A Lower of cost or market LO P2

A physical inventory of Liverpool Company taken at December 31 reveals the following.

		Per Unit
Item	Units	Cost			Market
Car audio equipment
Speakers	355	$	110		$	118
Stereos	270		131			121
Amplifiers	336		106			115
Subwoofers	214		72			62
Security equipment
Alarms	490		170			160
Locks	301		113			103
Cameras	222		332			342
Binocular equipment
Tripods	195		94			104
Stabilizers	180		115			125

Required: 1. Calculate the lower of cost or market for the inventory applied separately to each item. 2. If the market amount is less than the recorded cost of the inventory, then record the LCM adjustment to the Merchandise Inventory account.

• Required 1
• Required 2

If the market amount is less than the recorded cost of the inventory, then record the LCM adjustment to the Merchandise Inventory account.

Journal entry worksheet

• Record LCM adjustment.

Note: Enter debits before credits.

Date	General Journal	Debit	Credit
Dec 31