Fundamental Accounting Principles 22th Edition by John Wild ,Ken Shaw,Barbara Chiappetta

Exercise 25

(This serial problem began in Chapter 1 and continues through most of the book. If previous chapter segments were not completed, the serial problem can begin at this point.)
SP 6
Part A
Santana Rey of Business Solutions is evaluating her inventory to determine whether it must be adjusted based on lower of cost or market rules. Business Solutions has three different types of software in its inventory and the following information is available for each.

Required
1. Compute the lower of cost or market for ending inventory assuming Rey applies the lower of cost or market rule to inventory as a whole. Must Rey adjust the reported inventory value Explain.
2. Assume that Rey had instead applied the lower of cost or market rule to each product in inventory. Under this assumption, must Rey adjust the reported inventory value Explain.
Part B
Selected accounts and balances for the three months ended March 31, 2016, for Business Solutions follow.

Required
1. Compute inventory turnover and days' sales in inventory for the three months ended March 31, 2016.
2. Assess the company's performance if competitors average 15 times for inventory turnover and 25 days for days' sales in inventory.