Question

Puvirnituq Ltd. (Puvirnituq) uses the lower of cost and NRV rule to value its inventory. Puvirnituq’s inventory on December 31, 2017 had
250,000 units of inventory on hand with an average cost of $4.75 per unit and an NRV $4 perunit. On March 31, 2018, the NRV of the inventory was $4.30 per unit and 70,000 of the units that were on hand at the end of December were still in inventory.

Required:
a. By how much should Puvirnituq’s inventory be written down in 2017?
b. Prepare the journal entry Puvirnituq will prepare to record the writedown in 2017.
c. What amount should be reported for inventory on Puvirnituq’s December 31, 2017 balance sheet?
d. By how much should Puvirnituq’s inventory be written up on March 31, 2018?
e. Prepare the journal entry needed to write up the inventory.
f. What amount should be reported for inventory on Puvirnituq’s March 31, 2018 balance sheet? Assume no new inventory was purchased in the first quarter of 2018.



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  • CreatedFebruary 26, 2015
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