Herman Company has three products in its ending inventory. Specific per unit data at the end of the year for each of the products are as follows:

 Herman Company has three products in its ending inventory. Specific per unit data at the end of the year for each of the products are as follows:

 

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On February 26 a hurricane destroyed the entire inventory stored in a warehouse owned by the Rockford Corporation. The following information is available from the records of the company’s periodic inventory system

 On February 26 a hurricane destroyed the entire inventory stored in a warehouse owned by the Rockford Corporation. The following information is available from the records of the company’s periodic inventory system: beginning inventory, $220,000; purchases and net sales from the beginning of the year through February 26, $400,000 and $600,000, respectively; gross profit ratio, 30%.
 
Estimate the cost of the inventory destroyed by the hurricane using the gross profit method.

 

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SLR Corporation has 1,000 units of each of its two products in its year-end inventory. Per unit data for each of the products are as follows:

 SLR Corporation has 1,000 units of each of its two products in its year-end inventory. Per unit data for each of the products are as follows:

 Determine the carrying value of SLR’s inventory assuming that the lower of cost or market (LCM) rule is applied to individual products. What is the before-tax income effect of the LCM adjustment?

 Determine the carrying value of SLR’s inventory assuming that the lower of cost or market (LCM) rule is applied to individual products.

What is the before-tax income effect of the LCM adjustment?

 

Explanation

 

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