Question $4-$ Lower of Cost & Net Realizable Value $(11$ marks$)$

The Champion's Pet Store sells two categories of products, dishes $($large bowls and small bowls$)$ and food $($canned and fresh$).$ Their year$-$end of August $31,2023,$ is coming up$,$ and they wish to determine the balance sheet valuation of their inventory $($on the perpetual basis$).$

Product

Category Dishes

Dishes Food Food

# of Units $28$

$23411$

Cost NRV

$ $66$ $ $67$ $ $79$ $ $70$ $ $47$ $ $71$ $ $150$ $ $195$

Large Bowls Small Bowls Canned Fresh

Required:

a$)$ Calculate the Lower of Cost and Net Realizable Value for each product. Calculate the inventory value that should be reported on August $31,2023,$ based upon category values. $(5$ marks$)$

b$)$ Usingtheresultsfromparta$),$preparethejournalentrytoadjustinventoryto LCNRV$.(1$ mark$)$

c$)$ What would be inventory value, if the calculations were based upon total inventory values instead? $(5$ marks$)$

Show your calculations: a$)$

b$)$ & c$)$

Date Account Title and Explanation Debit CreditQuestion $4-$ Lower of Cost & Net Realizable Value $(11$ marks$)$

The Champion's Pet Store sells two categories of products, dishes $($large bowls

and small bowls$)$ and food $($canned and fresh$).$ Their year$-$end of August $31,$

$2023,$ is coming up$,$ and they wish to determine the balance sheet valuation of

their inventory $($on the perpetual basis$).$

Required:

a$)$ Calculate the Lower of Cost and Net Realizable Value for each product.

Calculate the inventory value that should be reported on August $31,2023,$ based

upon category values. $(5$ marks$)$

b$)$ Using the results from part a$),$ prepare the journal entry to adjust inventory to

LCNRV$.(1$ mark$)$

c$)$ What would be inventory value, if the calculations were based upon total

inventory values instead? $(5$ marks$)$

Show your calculations:

b$)$ & c$)$