Response to the following problem:
The inventory of the Bateman Upholstering Corp. on December 31 consisted of the following items:
|
Frames
|
Quantity
|
Unit
|
|
Cost
|
Market
|
|
Type F-1
|
110
|
$14.25
|
$15.50
|
|
Type F-12
|
75
|
26.00
|
22.50
|
|
Type F-15
|
60
|
21.50
|
21.00
|
|
Springs (sets)
|
|
|
|
|
Type S-1
|
760
|
7.28
|
8.50
|
|
Type S-12
|
625
|
10.50
|
11.50
|
|
Type S-15
|
340
|
8.60
|
6.00
|
Required:
1. Calculate the ending inventory at the lower of cost and net realizable value, applied a. to each item b. to each category c. to the entire inventory.
2. What is the effect of each application of LCNRV on the gross profit in the current year? in the following year?