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The Key West Group Uses the Lower of Cost and Net

question 4

Essay

The Key West Group uses the lower of cost and net realizable value rule to value its kayak inventory.The Kayaks in inventory were purchased on January 1,2016 for $12,000.At year end December 31,2016 the net realizable value of Key West's inventory dropped to $9,000.At the end of 2017 due to a shortage of Kayaks this inventory increased in value to $15,000.
Required:
Prepare the required journal entries (if any)required at the 2016 and 2017 year end.


Definitions:

Will

A legal document that outlines how a person's assets will be distributed after their death.

Intestate

Having died without leaving a valid will.

Testator

A deceased person who died leaving a will.

Revoke

To officially cancel or withdraw a right, permission, or offer, rendering it no longer valid or in effect.

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