Scenario:

GingerSnaps is a local boutique specializing in unique home furniture. It accounts for its inventory using lower of cost or market (LCM) under U.S. GAAP. At the most recent inventory count on December 31, 2021, the inventory manager gathered the following information:

Cost

Replacement Cost

Sales Price

Disposal Cost

Chairs

85,000

82,500

80,000

2,500

Tables

125,000

123,000

195,000

10,000

Lamps

25,000

20,000

75,000

-

Rugs

57,000

56,000

62,000

5,250

The boutique has an automated perpetual inventory system that keeps track of the inventory by individual item. The boutique does not group or aggregate items for purposes of inventory valuation.

Prior to the inventory count, the allowance for inventory had a credit balance of $5,200. There are no additional selling costs or disposal costs other than the disposal costs noted in the table. The normal profit margin is 20% of the sales price.

The accountant for the boutique is trying to decide which LCM method the boutique should use. The accountant is aware that first-in, first-out lower of cost or market (FIFO LCM) is the easiest method to use but has received pressure from the boutiques external accountants to use last-in, first-out lower of cost or market (LIFO LCM).

In preparation for the questions that you will be asked on the above scenario, calculate the net realizable value of each inventory item using FIFO LCM, and then select the LCM.

In addition, calculate the ceiling and floor for the inventory and the designated market value using LIFO LCM. Once you have selected the designated market value for each inventory item, determine the LCM using LIFO LCM.

Based on this scenario and the given information, answer the following questions:

If the boutique uses LIFO LCM, what is the designated market value of the chairs?

If the boutique uses LIFO LCM, what is the designated market value of the tables?

If the boutique uses LIFO LCM, what is the designated market value of the lamps?

If the boutique uses LIFO LCM, what is the designated market value of the rugs?

If the boutique uses LIFO LCM, what is the LCM value of the chairs?

If the boutique uses LIFO LCM, what is the LCM value of the tables?

If the boutique uses LIFO LCM, what is the LCM value of the lamps?

If the boutique uses LIFO LCM, what is the LCM value of the rugs?

If the boutique uses FIFO LCM, what is the LCM value of the rugs?

If the boutique uses FIFO LCM, what is the LCM value of the lamps?

If the boutique uses FIFO LCM, what is the LCM value of the tables?

If the boutique uses LIFO LCM, what is the LCM value of the chairs?