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

The accountant for Richmond Sporting Goods has determined that the replacement cost (current market value) of the ending inventory as of December 31, 2012, is $67,750.
1. Which accounting principle or concept is most relevant to Richmond Sporting Goods’ decision to utilize LCM?
2. What value would Richmond Sporting Goods report on the balance sheet at December 31, 2012, for inventory?
3. Prepare any adjusting journal entry required from the informationgiven.

  • CreatedApril 29, 2014
  • Files Included
Post your question