Question

Raleigh Golf Pros uses the LIFO inventory method and values its inventory using the lower-of-cost-or-market (LCM) rule. Raleigh Golf Pros has the following account balances at December 31, 2012, prior to releasing the financial statements for the year:


The accountant for Raleigh Golf Pros has determined that the replacement cost (current market value) of the ending inventory as of December 31, 2012, is $61,700.

Requirements
1. Which accounting principle or concept is most relevant to Raleigh Golf Pros’ decision to utilize LCM?
2. What value would Raleigh Golf Pros report on the balance sheet at December 31, 2012, for inventory?
3. Prepare any adjusting journal entry required from the informationgiven.


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  • CreatedApril 29, 2014
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