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Chapter 9: Question P9-1 (page 482)

Remmers Company manufactures desks. Most of the company鈥檚 desks are standard models and are sold on the basis of catalog prices. At December 31, 2017, the following finished desks (10 desks in each category) appear in the company鈥檚 inventory. Finished Desks A B C D 2017 catalog selling price \(45 \)48 \(90 \)105 FIFO cost per inventory list 12/31/17 47 45 83 96 Estimated cost to complete and sell 5 11 26 20 2018 catalog selling price 50 54 90 120 The 2017 catalog was in effect through November 2017, and the 2018 catalog is effective as of December 1; catalog prices are net of the usual discounts.

Short Answer

Expert verified

The inventory value per LCNRV is $2,260.

Step by step solution

01

Calculation of net realizable value

Net realizable value is calculated as follows:

A

B

C

D

Selling price

$45

$48

$90

$105

Less: Cost to complete and sell

5

11

26

20

Net realizable value per unit (NRV)

$40

$37

$64

$85

02

Calculation of inventory value per LCNRV

Inventory value per LCNRV is calculated as follows:

Units

Cost

NRV

LCNRV (Per Unit)

LCNRV (Total)

A

10

$47

$40

$40

$400

B

10

45

37

37

370

C

10

83

64

64

640

D

10

96

85

85

850

$2,260

Thus, inventory value equals $2,260.

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Most popular questions from this chapter

Presented below is information related to Aaron Rodgers Corporation for the current year. Beginning inventory \( 600,000 Purchases 1,500,000 Total goods available for sale \)2,100,000 Sales revenue 2,500,000 Instructions Compute the ending inventory, assuming that (a) gross profit is 45% of sales, (b) gross profit is 60% of cost, (c) gross profit is 35% of sales, and (d) gross profit is 25% of cost.

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Gheorghe Moresan Lumber Company handles three principal lines of merchandise with these varying rates of gross profit on cost. Lumber 25% Millwork 30% Hardware and fittings 40% On August 18, a fire destroyed the office, lumber shed, and a considerable portion of the lumber stacked in the yard. To file a report of loss for insurance purposes, the company must know what the inventories were immediately preceding the fire. No detail or perpetual inventory records of any kind were maintained. The only pertinent information you are able to obtain are the following facts from the general ledger, which was kept in a fireproof vault and thus escaped destruction. Lumber Millwork Hardware Inventory, Jan. 1, 2017 \( 250,000 \) 90,000 $ 45,000 Purchases to Aug. 18, 2017 1,500,000 375,000 160,000 Sales revenue to Aug. 18, 2017 2,080,000 533,000 210,000 Exercises 479 480 Chapter 9 Inventories: Additional Valuation Issues Instructions Submit your estimate of the inventory amounts immediately preceding the fire.
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