Question

Pharoah Company uses the lower-of-cost-or-net realizable value basis for its inventory. The following data are available at December 31. Item Units Unit Cost Net Realizable Value Cameras: Minolta 7 $175 $157 Canon 11 142 176 Light meters: Vivitar 14 130 111 Kodak 17 120 132 Determine the amount of the ending inventory by applying the lower-of-cost-or-net realizable value basis.

Answer 1

Answer:

$6,689

Explanation:

As we know that the inventory should be recorded at cost or net realizable value which ever is lower

Particulars      Item Units      Unit Cost         Net Realizable Value    LCNRV

Minolta              7                    $175                $157                              $157

Canon               11                    142                   176                               $142

Vivitar               14                    130                   111                                $111

Kodak               17                     120                  132                              $120

So, the amount of ending inventory is

= 7 units  × $157 + 11 units × $142 + 14 units × $111 + 17 units × $120

= $1,099 + $1,562 + $1,988 + $2,040

= $6,689