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QUESTION 1 IT Tech Bhd follows the practice of valuing inventory at the Lower of...

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Question

Accounting

QUESTION 1

IT Tech Bhd follows the practice of valuing inventory at the Lower of Cost or Net Realizable Value (LCNRV). The following information is available from the companys inventory records as of 31 December 2018.

Item

Quantity

Cost per Unit (RM)

Estimated selling Price/ Unit (RM)

Completion and Selling Cost /Unit

Speaker

300

65.00

75.50

4.60

Keyboard

550

25.00

33.90

2.80

Pendrive

800

18.00

16.60

0.65

Monitor

230

135.00

142.30

8.70

REQUIRED:

  1. Calculate the LCNRV using the individual-item approach. Prepare the journal entries required as at 31 December 2018 assuming that a loss method and the Allowance to Reduce Inventory to NRV Account is used to record for the write down of the inventory.
  2. Assume that at 31 December 2018, the account of Allowance to Reduce Inventory to NRV had a credit balance of RM2,200. Determine the amount of the gain or loss that would be recorded due to the change in the Allowance to Reduce Inventory to NRV account as in (a). Show the related journal entry.
  3. Identify TWO (2) differences between consignor and consignee in a consignment basis.

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