Based on the data in Exercise 7-15 and assuming that cost was determined by the FIFO method, show how the merchandise inventory would appear on the balance sheet.

Based on the data in Exercise 7-15 and assuming that cost was determined by the FIFO method, show how the merchandise inventory would appear on the balance sheet.

Answer:

The merchandise inventory would appear in the Current assets section, as follows:

Merchandise inventory—at lower of cost (FIFO) or market........................ $41,880

Alternatively, the details of the method of determining cost and the method of valuation could be presented in a note.