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Sanchez Company was formed on January 1 of the current year and is preparing the annual financial statements dated December 31, current year. Ending inventory
Sanchez Company was formed on January 1 of the current year and is preparing the annual financial statements dated December 31, current year. Ending inventory information about the four major items stocked for regular sale follows: Item ENDING INVENTORY, CURRENT YEAR Net Realizable Unit Cost When Value (Market) Acquired (FIFO) at Year-End $ 20 $ 15 40 44 52 55 32 Quantity on Hand 30 55 35 15 A B D 27 Required: 1. Compute the valuation that should be used for the current year ending inventory using lower of cost or net realizable value applied on an item-by-item basis. 2. What will be the effect of the write-down of inventory to lower of cost or net realizable value on cost of goods sold for the year ended December 31, current year? Required 1 Required 2 Compute the valuation that should be used for the current year ending inventory using lower of cost or net realizable value applied on an item-by-item basis. Item Quantity Total Cost Total Net Realizable Value Lower of Cost or NRV A 30 B 55 15 Total
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