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Tatum Company has four products in its inventory. Information about the December 31, 2021, inventory is as follows:Product Total Cost Total Replacement Cost Total Net Realizable Value 101 $ 134,000 $ 122,600 $ 111,400102 100,000 94,400 122,200103 66,600 44,400 55,800104 33,600 31,400 56,200The normal profit is 25% of total cost.Required:1. Determine the carrying value of inventory at December 31, 2021, assuming the lower of cost or market (LCM) rule is applied to individual products.2. Assuming that inventory write-downs are common for Tatum Comp

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Answer:

  Carrying value of the Inventory

Product                                        carrying value

101                                                 $111,400

102                                                 100,000

103                                                 55,800

104                                                 33,600

Total                                           300,800

Explanation:

proudct        total cost         replacement cost            total net realizable cost

101                 $134,000            $122,600                         $111,400

102                100,000                 94,400                            122,200

103                66,600                  44,400                              55,800

104               33,600                   31,400                                56,200

in valuing the carrying amount of inventory, lower of cost or net realizable value is used.

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