Y's inventory records reveal the following information: Item Cost Market $$\begin{array} { l r l l }
\text { A } & \$ 3,100 & \$ 3,500 \
\text { B } & 5,100 & 3,000 \
\text { C } & 6,000 & 7,500 \
&{ \$ 14,200 } & \$ 14,000
\end{array}$$ For financial accounting purposes, Y values its ending inventory using FIFO and the lower of cost or market methods.For tax purposes, the value of Y's ending inventory is

Question

Y's inventory records reveal the following information: Item Cost Market $$\begin{array} { l r l l } 
\text { A } & \$ 3,100 & \$ 3,500 \
\text { B } & 5,100 & 3,000 \
\text { C } & 6,000 & 7,500 \
&{ \$ 14,200 } & \$ 14,000
\end{array}$$ For financial accounting purposes, Y values its ending inventory using FIFO and the lower of cost or market methods.For tax purposes, the value of Y's ending inventory is

Quizplus · Accepted Answer

The lower of cost or market method requires comparing the cost and market value of each item and using the lower of the two for inventory valuation. Item A: $3,100 (cost is lower), Item B: $3,000 (market is lower), Item C: $6,000 (cost is lower). Total: $3,100 + $3,000 + $6,000 = $12,100.

Y's Inventory Records Reveal the Following Information: Item Cost Market