Lower of Cost or Market Video Lessons

Concept

# Problem: On December 31, 2009, the end of the accounting period, Cruise Company has on hand 10,000 units of a resale item which cost $40 per unit when purchased on June 15, 2009. The selling price is$70 per unit. On December 30, 2009, the cost had dropped to $38 per unit. In view of the large quantity of units on hand, no purchases are anticipated in the next six to nine months. At what inventory amount should the 10,000 units be reported? a.$400,000. b. $700,000. c.$320,000. d. $380,000. ###### FREE Expert Solution ###### Problem Details On December 31, 2009, the end of the accounting period, Cruise Company has on hand 10,000 units of a resale item which cost$40 per unit when purchased on June 15, 2009. The selling price is $70 per unit. On December 30, 2009, the cost had dropped to$38 per unit. In view of the large quantity of units on hand, no purchases are anticipated in the next six to nine months. At what inventory amount should the 10,000 units be reported?

a. $400,000. b.$700,000.

c. $320,000. d.$380,000.