Tatum Company has four products in its inventory. Information about the December 31, 2021, inventory is as
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Question:
Tatum Company has four products in its inventory. Information about the December 31, 2021, inventory is as follows:
| Product | Total Cost | Total Replacement Cost | Total Net Realizable Value |
| 101 | $120,000 | $100,000 | $100,000 |
| 102 | $90,000 | $85,000 | $110,000 |
| 103 | $60,000 | $40,000 | $50,000 |
| 104 | $30,000 | $28,000 | $50,000 |
The normal profit is 25% of total cost.
Required:
1. Determine the carrying value of inventory at December 31, 2021, assuming the lower of cost or market (LCM) rule is applied to individual products.
2. Assuming that inventory write-downs are common for Tatum Company, record any necessary year-end adjusting entry.
Expert Answer:
1 Determine the carrying value of inventory at December 31 2021 For Product 101 Carrying value of inventory Lower of Total Cost or Total Net Realizabl... View the full answer
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