Compute the Lower of Cost or Market (LCM) for R. A.Mona's Pet Shop. Use the most conservative method of LCM. Mona’s Pet Store
Per unit
Inventory Items Units Cost Market Total Cost Total Market
Puppies 11 50 100
Turtles 12 25 20
Fish 40 8 7
Parrots 10 100 250
Cats 26 10 5

R.A. Mona's Pet Shop

Lower of Cost or Market (LCM):

= $2,200

Explanation:

a) Data and Calculations:

Mona’s Pet Store

Per unit

Inventory Items  Units     Cost       Market    Total Cost    Total Market

Puppies               11            50            100       $550

Turtles                12           25              20                                $240

Fish                    40             8                7                                   280

Parrots                10         100           250        1,000

Cats                   26           10                5                                  130

Total cost                                                    $1,550               $650 = $2,200

b) The Pet Shop will report a total inventory value of $2,200 based on the  Lower of Cost or Market Price computed above.  The choice to report inventory value based on the LCM ensures that the value of inventory is not overstated above its net realizable value.  This practice accords with conservative method of accounting.

answercontrol is returned to method c;