Question

merle industries had been selling its product for $34 per unit, but recently lowered the selling price to $22 per unit. the company's current inventory consists of 235 units purchased at $30 per unit. the market value of this inventory is currently $20 per unit. at what amount should the company’s inventory be reported on the balance sheet?

Answer 1

If  the market value of this inventory is currently $20 per unit.  The amount that  the company’s inventory  should be reported on the balance sheet is $4,700.

What is the amount to reported on the balance sheet?

Using this formula to determine or find the amount that should be reported in the balance sheet

Total lower of cost or market = Lower of cost or market per unit × Number of units in inventory

Let plug in the formula

Total lower of cost or market  = $20 × 235 units

Total lower of cost or market   = $4,700

Therefore the amount of $4,700 should be reported.

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