Tatum Company has four products in its inventory. Information about the December 31, 2011, inventory is as

Question:

Tatum Company has four products in its inventory. Information about the December 31, 2011, inventory is as follows:

The normal gross profit percentage is 25% of cost.

Required:

1. Determine the balance sheet inventory carrying value at December 31, 2011, assuming the LCM rule is applied to individual products.

2. Assuming that Tatum recognizes an inventory write-down as a separate income statement item, determine the amount of the loss.

Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...