What value would Richmond report on the balance sheet at August 31, 2012, for inventory? 1 answer below »

Applying the lower-of-cost-or-market rule to inventories

Richmond Sporting Goods, which uses the FIFO method, has the following account balances at August 31, 2012, prior to releasing the financial statements for the year:

Inventory

Cost of goods sold

Sales revenue

Bal

14,500

Bal

67,000

Bal

117,000

Richmond has determined that the replacement cost (current market value) of the August 31, 2012, ending inventory is $13,500.

Requirements

1. Prepare any adjusting journal entry required from the information given.

2. What value would Richmond report on the balance sheet at August 31, 2012, for inventory?

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