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Data related to the inventories of Alpine Ski Equipment and Supplies is presented below: Skis Boots Apparel Supplies Selling price $ 160,000 $ 169,000 $ 107,000 $ 71,000 Cost 130,000 138,000 74,900 46,150 Replacement cost 120,000 119,000 111,000 42,150 Sales commission 10 % 10 % 10 % 10 % In applying the lower of cost or net realizable value rule, the inventory of apparel would be valued at:

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anthougo

Answer:

Alpine Ski Equipment and Supplies

In applying the lower of cost or net realizable value rule, the inventory of apparel would be valued at:

$74,900

Explanation:

a) Data and Calculations:

Inventories of Alpine Ski Equipment and Supplies:

                                        Skis           Boots         Apparel        Supplies

Selling price             $ 160,000    $ 169,000     $ 107,000     $ 71,000

Cost                             130,000        138,000         74,900        46,150

Replacement cost      120,000         119,000         111,000        42,150

Sales commission             10 %              10 %             10 %            10 %

Net realizable value $144,000       $152,100      $96,300    $63,900

Lower of cost or NRV $130,000   $138,000       $74,900     $46,150

b) Alpine Ski Equipment and Supplies applies the lower of cost or market rule by recording the cost of inventory at the lower of the original cost or its net realizable value.   In all the product categories, the costs are lower than the net realizable values.  To get the net realizable value for each product category, we deduct the sales commissions from their respective selling prices.

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