Copperhead Company has provided you with the following information regarding its inventory of copper for September and

Question:

Copperhead Company has provided you with the following information regarding its inventory of copper for September and October. Copperhead uses a perpetual inventory system.

______________________September 30 October 31

Copper Inventory (in tonnes)…2,500…………………..2,000

Cost per tone………….......………..$505…………………...$535

NRV per tone……………........…….$540…………………...$520

Instructions

(a) Calculate the cost, the net realizable value, and the amount to be reported on the balance sheet for Copperhead's inventory at (1) September 30 and (2) October 31.

(b) Prepare any journal entries required to record the LCNRV of the copper inventory at (1) September 30 and (2) October 31.

(c) Assume that during the month of November the company did not purchase or sell any copper inventory and that the NRV per tonne was $530 on November 30. Is an adjusting entry required at November 30? Explain. If so, prepare the adjusting entry.

(d) What will have to be disclosed in Copperhead's notes to the financial statements with regard to its copper inventory?

Taking It Further

Do all companies have to report inventory at the LCNRV on the balance sheet?

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