Pettengal Corporation sells its product, a rare metal, in a controlled market with a quoted price applicable to all quantities.The total cost of 5,000 pounds of the metal now held in inventory is $150,000.The total selling price is $350,000, and estimated costs of disposal are $5,000.At what amount should the inventory of 5,000 pounds be reported in the balance sheet?
A)$145,000.
B)$150,000.
C)$345,000.
D)$350,000.

Question

Quizplus · Accepted Answer

The inventory should be reported at the lower of cost or net realizable value (NRV). The cost is $150,000, and the NRV is the selling price ($350,000) minus disposal costs ($5,000), which equals $345,000. Since $150,000 (cost) is lower than $345,000 (NRV), the inventory should be reported at $150,000.

Pettengal Corporation Sells Its Product, a Rare Metal, in a Controlled