Parker Funiture Shop Inc. uses the lower of cost and net realizabile value basls
ID: 341907 • Letter: P
Question
Parker Funiture Shop Inc. uses the lower of cost and net realizabile value basls for its Imventory. The following data are available t 25 Large Small $286 $254 Chairs 58 46 56 Wooden 27 Your answer is correct. What amount should be reported on Parker Furniture Shop's financial r statements, after the lower of cost and net realizable value rule is applied to Individual Inventory items? Tables: Large 350 Small Chairs: Ptastic Attemptse 2 Prepare the adjusting youmal entry required, if any, to record the lower of cost and net realizable value of the inventory assuming Parker Furniture Shop uses a perpetual inventory system. (Credit account titles are automatically indented when the amount is entered. Do not indent manually) Dec. 31Explanation / Answer
Units Cost/unit Total cost NRV Total realizable Value Lower of cost or NRV Tables Large 25 $286 $7,150 $254 $6,350 $6,350 Small 29 $132 $3,828 $168 $4,872 $3,828 Chairs plastic 58 $56 $3,248 $40 $2,320 $2,320 wooden 46 $16 $736 $27 $1,242 $736 Total $14,962 $13,234 Inventory value should be write off = (14,962-13,234) $1,728 Journal entry Particulars Debit Credit Loss on write off inventory $1,728 Inventory Account $1,728 ( To record the loss on written off of the inventory)