A company reports inventory using the lower-of-cost-or-market method. Below is information related to its year-end inventory: $$\begin{array} { l c c c }
\text { Inventory } & \text { Quantity } & \text { Cost } & \text { Market } \
\text { Item A } & 100 & \$ 25 & \$ 30 \
\text { Item B } & 50 & 30 & 20
\end{array}$$
Calculate ending inventory under lower-of-cost-or-market and record any necessary adjustment to inventory.

Question

A company reports inventory using the lower-of-cost-or-market method. Below is information related to its year-end inventory: $$\begin{array} { l c c c } 
\text { Inventory } & \text { Quantity } & \text { Cost } & \text { Market } \
\text { Item A } & 100 & \$ 25 & \$ 30 \
\text { Item B } & 50 & 30 & 20
\end{array}$$ 
Calculate ending inventory under lower-of-cost-or-market and record any necessary adjustment to inventory.

Quizplus · Accepted Answer

Ending inventory = (100 $\times$ $25) + (50 $\times$ $20) = $3,500.
Write-down = $4,000 (total cost) - $3,500 (LCM) = $500.

A Company Reports Inventory Using the Lower-Of-Cost-Or-Market Method Calculate Ending Inventory Under Lower-Of-Cost-Or-Market and Record Any Necessary Adjustment