Consider the following data: Which of the following depicts the proper account balance after the application of the LCNRV rule?

Question

Consider the following data:  Which of the following depicts the proper account balance after the application of the LCNRV rule?

Quizplus · Accepted Answer

The LCNRV (Lower of Cost or Net Realizable Value) rule requires that inventory is reported at the lower of cost or net realizable value. In this case, the cost of inventory is $115,000 (based on the information given), which is less than the net realizable value of $119,000. Therefore, the ending inventory balance will be $115,000. The cost of goods sold will be calculated as the beginning inventory plus purchases minus ending inventory. Using the LCNRV method, the cost of goods sold will be $161,000 ($75,000 beginning inventory + $110,000 purchases - $115,000 ending inventory = $161,000). Therefore, choice C is also correct, but B is the best answer as it specifically asks for the proper ending inventory balance.

Consider the Following Data: Which of the Following Depicts