Question

At December 31, 2015, the following information was available from Dole Co.'s accounting records: Cost Retail Inventory, 1/1/2015 $147,000 $ 203,000 Purchases 833,000 1,155,000 Additional markups 42,000 Available for sale $980,000 $1,400,000 Sales for the year totaled $1,050,000. Markdowns amounted to $10,000. Under the lower-of-cost-or-market method, Dole's inventory at December 31, 2015 was

Answer 1

Answer:

Dole's inventory at December 31, 2015  = $980,000

Explanation:

Data provided in the question:

                                                      Cost                 Retail

Inventory, 1/1/2015                    $147,000           $203,000

Purchases                                  833,000            1,155,000

Additional markups                                                 42,000      

Available for sale                    $980,000         $1,400,000

Total Sales for the year = $1,050,000

Markdowns = $10,000

Now,

Under the  lower-of-cost-or-market method,

the cost of the inventory is recorded at a price lower of the original cost or the retail value.

Therefore,

For the given data original cost is less than the retail price i.e ( $980,000 < $1,400,000 )

Hence,

Dole's inventory at December 31, 2015  = $980,000