Question

On December 31, 2019, Cruise Company has 10,000 units of an inventory item, which cost $40 per unit when purchased on June 15, 2019. The selling price was $60 per unit. On December 30, 2019, it was determined that the cost to sell is $24 per unit. At what amount should the 10,000 units of inventory be reported at on the December 31, 2019 balance sheet?

Answer 1

Answer:

$360,000

Explanation:

Inventory item = 10,000 units

Cost per unit = $40

Selling price per unit = $60

Inventory should be recorded cost or net realization value which ever is less.

Net realization value = Selling price per unit - cost to sell

                                   = $60 - $24

                                   = $36 per unit

Therefore, the amount should the 10,000 units of inventory be reported at on the December 31, 2019 balance sheet is:

= 10,000 units × $36 per unit

= $360,000