Question Completion:
Almaden Hardware Store sells two product categories, tools and paint products. Information pertaining to its 2018 year-end inventory is as follows:
Inventory, by                           Per Unit    Net Realizable
Product Category  Quantity     Cost              Value
Tools:
Hammers                  100         $5.00          $5.50
Saw                          200          10.00            9.00
Screwdrivers           300           2.00            2.60
Paint products:
1-gallon cans          500           6.00             5.00
Paint brushes         100            4.00            4.50
Required:
1. Determine the carrying value of inventory at year-end, assuming the lower of cost or net realizable value (LCNRV) rule is applied to (a) individual products, (b) product categories, and (c) total inventory.
2. Assuming inventory write-downs are common for Almaden, record any necessary year-end adjustment amount for each of the LCNRV applications in requirement 1.
Answer:
<h3>Almaden Hardware Store</h3>
1. The carrying value of inventory at year-end, assuming the lower of cost or net realizable value (LCNRV) rule is applied to 
(a) individual products:
= $5,800
(b) product categories:
 = $6,050
(c) total inventory:
= $6,080
2. Inventory write-down as a line item in the income statement, for each of the LCNRV applications for:
(a) individual products:
Debit Cost of goods sold $700
Credit Inventory $700
To record the inventory write down based on LCNRV.
(b) product categories:
Debit Cost of goods sold $450
Credit Inventory $450
To record the inventory write down based on LCNRV.
(c) total inventory:
Debit Cost of goods sold $420
Credit Inventory $420
To record the inventory write down based on LCNRV.
Explanation:
a) Data and Calculations:
Inventory, by                           Per Unit    Net Realizable  LCNRV  Inventory
Product Category  Quantity     Cost             Value                           Value
Tools:
Hammers                  100         $5.00          $5.50             $5.00       $500
Saw                          200          10.00            9.00               9.00        1,800
Screwdrivers           300           2.00            2.60                2.00         600
Paint products:
1-gallon cans          500           6.00             5.00               5.00      2,500
Paint brushes         100            4.00            4.50                4.00         400
Inventory amount (LCNRV rule applied to individual products)  $5,800
Inventory amount (LCNRV rule applied to product categories)
Tools: Cost value = (100 * $5) + (200 * $10) + (300 * $2) = $3,100
           NRV value = (100 * $5.50) + (200 * $9) + (300 * $2.60) = $3,130
LCNRV = $3,100 for tools
Paint products: Cost value = (500 * $6) + (100 * $4) = $3,400
                          NRV value =  (500 * $5) + (100 * $4.50) = $2,950
LCNRV = $2,950 for paint products
Total LCNRV = $6,050 ($3,100 + $2,950)
Inventory amount (LCNRV rule applied to total inventory):
Cost value = (100 * $5) + (200 * $10) + (300 * $2) + (500 * $6) + (100 * $4)
 = $6,500
NRV value = (100 * $5.50) + (200 * $9) + (300 * $2.60) + (500 * $5) + (100 * $4.50) = $6,080
Year-end Adjustments for each of the LCNRV applications in requirement 1:
(a) individual products:
Cost of Inventory =   $6,500
LCNRV =                      5,800
Inventory write down  $700
(b) product categories:
Cost of Inventory =   $6,500
LCNRV =                      6,050
Inventory write down  $450
(c) total inventory:
Cost of Inventory =   $6,500
LCNRV =                      6,080
Inventory write down  $420