Part A Santana Rey of Business Solutions is evaluating her inventory to determine whether it must be adjusted based on lower of cost or market rules. Business Solutions has three different types

Part A

Santana Rey of Business Solutions is evaluating her inventory to determine whether it must be adjusted based on lower of cost or market rules. Business Solutions has three different types of software in its inventory and the following information is available for each.

Per Unit

Inventory Items Units Cost Market

Office productivity 9 $ 82 $ 80

Desktop publishing 8 109 106

Accounting 9 96 102

Required:

1(a).

Compute the lower of cost or market for ending inventory assuming Rey applies the lower of cost or market rule to inventory as a whole. (Omit the “$” sign in your response.)

Total Total

Inventory Items cost market

Office productivity $ $

Desktop publishing

Accounting

Totals $ $

Lower of cost or market of inventory as a whole $

1(b).

Must Rey adjust the reported inventory value?

No

Yes

2(a).

Compute the lower of cost or market rule to each product in inventory. (Omit the “$” sign in your response.)

LCM applied

Inventory Items to items

Office productivity $

Desktop publishing

Accounting

Totals $

2(b).

Must Rey adjust the reported inventory value?

Yes

No

Part B

Selected accounts and balances for the three months ended March 31, 2012, for Business Solutions follow.

January 1 beginning inventory $ 0

Cost of goods sold 56,902

March 31 ending inventory 2,474

Required:

1.

Compute inventory turnover and days’ sales in inventory for the three months ended March 31, 2012. (Use 365 days a year. Do not round intermediate calculations. Round your days’ sales answer to 1 decimal place and turnover answer to the nearest whole number.)

Inventory turnover times

Days’ sales in inventory days

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