Assume you recently obtained a job with Perfumania, the largest specialty retailer of discounted fragrances in the
Question:
You realize that you'll need to multiply the quantity of each item by the lower of cost and net realizable value per unit. You e-mailed your friend Owen for Excel help.
From: Owentheaccountant@yahoo.com
To: Helpme@hotmail.com
Cc:
Subject: Excel-Help
So you don't have any idea how to pick the lower of cost and net realizable value? You can do this several different ways, but the easiest is to use the MIN command. Set up your spreadsheet similar to the table you sent me, and then add two new columns. In the first new column, enter the command "= MIN (cost cell, net realizable value cell)" where cost cell is the cell containing the cost per unit and net realizable value cell is the cell containing the net realizable value per unit. Next, in the second new column, multiply the quantity by the lower of cost or net realizable value per unit, and then SUM the column.
Required:
1. Prepare a spreadsheet that calculates total lower of cost and net realizable value for inventory, applied on an item-by-item basis.
2. Prepare a journal entry to record the inventory lower of cost and net realizable value write-down?
Step by Step Answer:
Fundamentals of Financial Accounting
ISBN: 978-1259103292
4th Canadian edition
Authors: Fred Phillips, Robert Libby, Patricia Libby, Brandy Mackintosh