Better buy, inc. has 7 units in inventory on december 31. the units were purchased in november for $160 each. the price lists from the suppliers indicate that the same items would now cost the company a total of $1,155. what would be the amount reported as ending merchandise inventory on the balance sheet?

$1,120

Explanation:

Ending Merchandise Inventory is value of closing inventory in hand, to be valued at lower of cost or net realizable value or replacement value

Here, cost of closing inventory = 7 units X $160 each = $1,120

Since current realizable/ replacement value = $1,155

Cost is less than realizable value, therefore cost will be considered.

Thus ending merchandise inventory will be valued at total of $1,120.

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