Purchased merchandise on account that cost $4,190. the goods in event 1 were purchased fob shipping point with freight cost of $255 cash. returned $475 of damaged merchandise for credit on account. agreed to keep other damaged merchandise for which the company received an $210 allowance. sold merchandise that cost $2,690 for $13,000 cash. delivered merchandise to customers in event 5 under terms fob destination with freight costs amounting to $165 cash. paid $2,810 on the merchandise purchased in event 1. paid $8,630 cash for operating expenses.

Example1 lcnrv: ted company uses the lower of cost or nrv method in valuing its inventory items. the inventory at december 31, 2017, consists of products a, b and c, each having 1,000 units. relevant unit data for these products appear below: item a item b item c cost $ 80 $80 $80 estimated selling price 180 100 90 estimated selling cost 30 30 30 required: using the lower of cost or net realizable value rule, determine the proper value of inventory for balance sheet reporting purposes at december 31, 2017. prepare any necessary journal entry. apply the lower of cost or nrv method: • on an individual inventory basis; • on a group basis; • on a total inventory basis. solution worksheet: inventory (on an individual basis): inventory value item nrv cost lc- item a item b item c total inventory (on a group basis): inventory value item nrv cost lc- group 1 (item a and b) group 2 (item c) total inventory (on an aggregate inventory basis): inventory value item nrv cost lc- total inv