P9-1 (lcnrv) remmers company manufactures desks.

most of the company's desks are standard

models and are sold on the basis of catalog. at december 31, 2010, the following finished desks
appear in the company's inventory

finished desks a b c d

2010 catalog selling price $450 $480 $900 $1,050

fifo cost per inventory list 12/31/10 470 450 830 960

estimated cost to complete and sell 50 110 260 200

2011 catalog selling price 500 540 900 1,200

the 2010 catalog was in effect through november 2010 and the 2011 catalog is effective as of
december 1, 2010. all catalog prices are net of the usual discounts.

instructions

at what amount should each of the four desks appear in the company's december 31, 2010,
inventory, assuming that the company has adopted a lower-of-fifo-cost-or-net realizable value
approach for valuation of inventories on an individual-item basis?

p9-2 (lcnrv) garcia home improvement company installs replacement siding, windows, and
louvered glass doors for single family homes and condominium complexes in nortthern new
jersey and southern new york. the company is in the process of preparing its annual financial
statements for the fiscal year ended may 31, 2010, and jim alcide, controller for garcia, has
gathered the following data concerning inventory.

at may 31, 2010, the balance in garcia's raw material inventory account was $408,000, and
the allowance to reduce inventory to nrv had a credit balance of $27,500. alcide summarized the
relevant inventory cost and market data at may 31, 2010, in the schedule below.

alcide assigned patricia devereaux, an intern from a local college, the task of calculating
the amount that should appear on garcia's may 31, 2010, financial statements for inventory
under the lcnrv rule as applied to each item in inventory. devereaux expressed concern over
departing from the cost principle.

cost sales price net realizable

value

alumunium siding $ 70.000 $ 64,000 $ 56,000

cedar shake siding 86.000 94,000 84,800

louvered glass doors 112.000 186,400 168,300

thermal windows 140,000 154,800 140,000

total $408,000 $499,200 $449,100

inscructions

(a) (1) determine the balance in the allowance to reduce inventory to net realizable value at
may, 31, 2010.

(2) for the fiscal year ended may 31, 2010, determine the amount of the gain or loss that
would be recorded (using the loss method) due to the change in the allowance to reduce
inventory to net realizable value.

(b) explain the rationale for the use of the lcnrv rule as it applies to inventories.

prepare a schedule computing the amount of inventory fire loss. the supporting schedule of the
computation of the gross profit should be in good form.

p9-7 (retail inventory method) the records for the clothing department of wei's discount store
are summarized below for the month of january (000 omitted).

inventory january 1 : at retail hk$25,000; at cost hk$17,000

purchase in january : at retail hk$137,000; at cost hk$82,500

freight-in : hk$7,000

purchase returns : at retail hk$3,000; at cost hk$2,300

transfers in from suburban branch : at retail hk$13,000; at cost

hk$9,200

net markups : hk$8,000

net markdowns : hk$4,000

inventory losses due to normal breakage, etc : at retail hk$400

sales at retail : hk$95,000

sales returns : hk$2,400

instructions

(a) compute the inventory for this department as of january 31, at retail prices.

(b) compute the ending inventory using lower-of-average-cost-or-net realizable value.

p9-8 (retail inventory method) presented below is information related to waveland inc.

cost retail

inventory, 12/31/10 $250,000 $ 390.000

purchases 914,500 1,460,000

purchase returns 60,000 80,000

 purchase discounts 18,000 -

gross sales - 1,410,000

sales returns - 97,500

markups - 120,000

markup cancellations - 40,000

markdowns - 45,000

markup cancellations - 20,000

freight-in 42,000 -

employee discounts granted - 8,000

loss from breakage (normal) - 4,500

instrctions

assuming that waveland inc, uses the conventional retail inventory method, compute the cost of
its ending inventory at december 31, 2011.