Accounting Exercise 7.3 (Accounting for Inventories)
The table below presents the costs and market values of several items that My New Bike Company had on hand at the end of 20X9 accounting period:
| Item | Cost |
Market |
| Sport Bike | $1,200 |
$1,300 |
| Mountain Bike | $1,500 |
$1,400 |
| Racing Bike | $1,000 |
$950 |
| In aggregate | $3,700 |
$3,650 |
Required:
1) Determine the lower of cost or market for each individual item and
prepare a journal entry to record the loss.
2) Determine the lower of cost of market for all items in aggregate and
prepare a journal entry to record the loss.
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