On December 31,2010,Cruise Company has 10,000 units of an inventory item which cost $40 per unit when purchased on June 15,2010.The selling price was $70 per unit.On December 30,2010,the replacement cost was $38 per unit.At what amount should the 10,000 units of inventory be reported at on the December 31,2010 balance sheet?

Question

Quizplus · Accepted Answer

Inventory is reported on the balance sheet at replacement cost ($38) when it is less than cost ($40). The inventory cost ($380,000) equals replacement cost ($38) multiplied by 10,000 units.

On December 31,2010,Cruise Company Has 10,000 Units of an Inventory