The records of Loren Movers Ltd. contained the following inventory data:

Required:
1. Calculate two different amounts that could justifiably be recorded as the allowance to reduce inventory to lower- of- cost- or- NRV at the end of 20X1.
2. Record the 20X1 lower- of- cost- or- NRV adjustments ( if any) for each of the two amounts from requirement ( 1), using the valuation allowance method.
3. Record the 20X2 lower- of- cost- or- NRV adjustments ( if any) under each of the two lower of cost or NRV methods, using the valuation allowance.

Transcribed Image Text:

20X1 20X2 Cost NRV Cost NRV Category 1 Item A $10,000 9,000 5,000 35,000 $75,000 $77,000 5,000 3,000 9,000 45,000 52,000 $60,000 $64.000 Item B Item C 40,000 10,000 33,000 Category 2 Item D $18,000 $16,500 4,000 Item F 42000 42,000 $80,000 $62,500 $12,000 $10,500 1,000 4,000 56,000 $72 000 Item E 20,000 5 $65,500