Question

It is December​ 31, the end of the​ year, and the controller of Saxton Corporation is applying the​ lower-of-cost-or-market (LCM) rule to inventories. Before any​ year-end adjustments, the company reports the following​ data: LOADING...​(Click the icon to view the​ data.) Saxton determines that the net realizable value of ending inventory is $48,000. Show what Saxton should report for ending inventory and for cost of goods sold. Identify the financial statement where each item appears. Financial statement where item is reported Balance to be reported Inventory Balance Sheet Cost of goods sold Income Statement 393000

Answer 1

The inventory that will be reported on the balance sheets is $43000 while the cost of goods sold is $455000

Your question is incomplete. A similar question will be used on guiding you. Let's assume the following figures:

• The net realizable value of ending inventory = $43000
• Historical cost of ending inventory = $58000
• Cost of goods sold = $440000

To know the inventory amount that will be reported on the balance sheets, you've to select the lowest between the net realizable value of the ending inventory and the historical cost of ending inventory. The lowest is $43000.

The cost of goods sold that'll be reported will be:

= $440,000 + $15,000

= $455,000

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