Answer:
The $5,434 is the the amount of the ending inventory by applying the lower-of-cost-or-net realizable value basis.
Explanation:
Based on the Generally Accepted Accounting Principles (GAAP), the inventory value should be recorded at the cost or net realizable value whichever is lower.
So, by using the above information. Now we can compute the ending inventory.
For Camera :
1. Minolta = Unit price × lower cost of Net realizable value or cost
= 3 × 156
= $468
2. Canon = Unit price × lower cost of Net realizable value or cost
= 10 × 147
= $1,470
For Light Meters:
1. Vivitar = Unit price × lower cost of Net realizable value or cost
= 15 × 104
= $1,560
2. Kodak = Unit price × lower cost of Net realizable value or cost
= 16 × 121
= $1,936
So, the ending inventory is sum of the value of all products which is equals to
Minolta + Canon + Vivitar + Kodak
$468 + $1,470 + $1,560 + $1,936
$5,434
Hence, $5,434 is the the amount of the ending inventory by applying the lower-of-cost-or-net realizable value basis.
