Broderick Company sells lumber. Inventory cost data per 1,000 board feet of lumber for the Broderick Company are as follows:
|
Item |
Plywood |
Oak |
Pine |
Redwood |
|
Quantity on hand. |
25 |
20 |
4300% |
12 |
|
Original cost |
600 |
$2,000 |
$800 |
$1,400 |
|
Current replacement cost. |
600 |
1,800 |
700 |
1,800 |
|
Net realizable value |
$500 |
1,900 |
800 |
1,600 |
|
Net realizable value minus normal profit |
400 |
1,850 |
600 |
1,300 |
1. By what amount, if any, should each item (considered separately) be written down?
2. Make the appropriate journal entry (or entries):
a. Assuming that each inventory item is considered separately.
b. Assuming that LCM is applied to total inventory.