Jenks Company developed the following information about its inventories in applying the lower of cost or market (LCM) basis in valuing inventories: $\begin{array}{lrr}\text { Product } & \text { Cost } & \text { Market } \
\mathrm{A} & \$ 114,000 & \$ 120,000 \
\mathrm{~B} & 80,000 & 76,000 \
\mathrm{C} & 160,000 & 162,000
\end{array}$ If Jenks applies the LCM basis, the value of the inventory reported on the balance sheet would be
A)$354,000.
B)$358,000.
C)$350,000.
D)$362,000.

Question

Quizplus · Accepted Answer

The LCM rule requires inventory to be reported at the lower of cost or market value. For Product A, the cost is lower ($114,000). For Product B, the market value is lower ($76,000). For Product C, the cost is lower ($160,000). Adding these values gives $114,000 + $76,000 + $160,000 = $350,000.

Jenks Company Developed the Following Information About Its Inventories in Applying