Wonkie Company's ending inventory at cost)was $75,000. The market value of the ending inventory was $65,000. How will this affect the reported ending inventory and cost of goods sold?

Question

Quizplus · Accepted Answer

According to the lower of cost or market rule, inventory should be reported at the lower of its cost or market value. Therefore, the ending inventory will be reported at $65,000, decreasing it by $10,000, and cost of goods sold will increase by $10,000 to reflect the loss in inventory value.

Wonkie Company's Ending Inventory at Cost)was $75,000