Better Deals, Inc. has 6 units in inventory on December 31. The units were purchased in November for $165 each. The price lists from the suppliers indicate that the same items would now cost the company a total of $1,020. What would be the amount reported as ending Merchandise Inventory on the balance sheet?

Question

Quizplus · Accepted Answer

The ending Merchandise Inventory should be reported at the lower of cost or market. The cost of the inventory is 6 units x $165 = $990. The market value is $1,020. Since $990 is lower, it should be reported as the ending inventory value.