Financial Accounting: An Integrated Statements Approach, 2nd Edition

Data on the physical inventory of Cinnabar Co. as of December 31, 2007, are presented below.

Inventory Unit Market

Description Quantity Price

A90 35 $ 57

C18 16 200

D41 24 140

E34 125 26

F17 18 550

G68 60 15

K41 5 390

Q79 375 6

R72 100 17

S60 6 235

W21 140 18

Z35 9 700

Quantity and cost data from the last purchases invoice of the year and the next-to-the-last

purchases invoice are summarized as follows:

Last Next-to-the-Last

Purchases Invoice Purchases Invoice

Quantity Unit Quantity Unit

Description Purchased Cost Purchased Cost

A90 25 $ 59 30 $ 58

C18 35 206 20 205

D41 10 144 25 142

E34 150 25 100 24

F17 10 565 10 560

G68 100 15 100 14

K41 10 385 5 384

Q79 500 6 500 6

R72 80 20 50 18

S60 5 250 4 260

W21 100 20 75 19

Z35 7 701 6 699

Instructions

Determine the inventory at cost and also at the lower of cost or market, using the first-in, first-

out method. Record the appropriate unit costs on an inventory sheet and complete the pricing

of the inventory. When there are two different unit costs applicable to an item, proceed as

follows:

1. Draw a line through the quantity, and insert the quantity and unit cost of the last purchase.


2. On the following line, insert the quantity and unit cost of the next-to-the-last purchase.


3. Total the cost and market columns and insert the lower of the two totals in the Lower of
   C or M column. The first item on the inventory sheet has been completed below as an
   example.

Inventory Sheet

December 31, 2007

Total

Inventory Unit Cost Unit Market Lower of

Description Quantity Price Price Cost Market C or M

A90 35 25 $59 $57 $1,475 $1,425

10 58 580 570

$2,055 $1,995 $1,995

296 Chapter 6 Inventories

Alternate Problem

6-4B

Lower-of-cost-or-market

inventory

Goal 7

Total LCM, $38,585