Basic inventory data for Granite Company as of June 30 are presented below:
Assume Granite Company applies the lower-of-cost-or-net realizable value method for the inventory by major category. Determine the amount of inventory adjustment required at the end of the year.

Question

Basic inventory data for Granite Company as of June 30 are presented below:
 Assume Granite Company applies the lower-of-cost-or-net realizable value method for the inventory by major category. Determine the amount of inventory adjustment required at the end of the year.

Quizplus · Accepted Answer

Sporting Goods:
Cost: (20 × $72) + (40 × $220) + (10 × $80) = $11,040
NRV: (20 × $64) + (40 × $232) + (10 × $100) = $11,560
Lowest is cost.
Electronics:
Cost: (20 × $328) + (30 × $232) = $13,520
NRV: (20 × $300) + (30 × $220) = $12,600
Lowest is NRV.
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Basic Inventory Data for Granite Company as of June 30