Question

A physical inventory of Liverpool Company taken at December 31 reveals the following. Per Unit Cost Market Units 103 338 253 319 197 $ 93 $101 114 8998 44 55 Item Car audio equipment Speakers Stereos Amplifiers Subwoofers Security equipment Alarms Locks Cameras Binocular equipment Tripods Stabilizers 128 473 284 205 153 96 313 325 178 163 73 100 87 108 Required: 1. Calculate the lower of cost or market for the inventory applied separately to each item. 2. If the market amount is less than the recorded cost of the inventory, then record the LCM adjustment to the Merchandise Inventory account. Complete this question by entering your answers in the tabs below.

PLEASE ANSWER ACCORDING TO THE RESPECTIVE TABLES {THE BLUE HIGHLIGHTS AROUND EACH UNIT ARE REQUIRED}

THANK YOU!!!

Answer 1

Solution:

1.

		Per Unit		Total		LCM applied to:
Item	Units	Cost	Market	Cost	Market	Entire Inventory	Individual items
Car audio equipment
Speakers	338	$93	$101	$31,434	$34,138		$31,434
Streos	253	$114	$103	$28,842	$26,059		$26,059
Amplifiers	319	$89	$98	$28,391	$31,262		$28,391
Subwoofers	197	$55	$44	$10,835	$8,668		$8,668
Security equipment
Alarms	473	$153	$128	$72,369	$60,544		$60,544
Locks	284	$96	$87	$27,264	$24,708		$24,708
Cameras	205	$313	$325	$64,165	$66,625		$64,165
Binocular equipment
Tripods	178	$73	$87	$12,994	$15,486		$12,994
Stabilizers	163	$100	$108	$16,300	$17,604		$16,300
Total				$292,594	$285,094	$285,094	$273,263

Lower of cost or market for inventory applied separately =$273,263

2.)

Record LCM adjustment.

No.of event	Date	General Journal	Debit	Credit
1.	Dec.31	Cost of goods sold	$19,331
		Merchandise inventory		$19,331
		(To record LCM adjustment)

Explanation 2.

To adjust inventory cost to market.

$19,331 =$292,594 - $273,263