BE6-5

BE6-5 In its first month of operation, Moraine Company purchased 100 units of inven- tory for $6, then 200 units for $7, and finally 140 units for $8. At the end of the month, 180 units remained. Compute the amount of phantom profit that would result if the com- pany used FIFO rather than LIFO. Explain why this amount is referred to as phantom profit. The company uses the periodic method.

BE6-7 Olsson Video Center accumulates the following cost and market data at December 31.
Inventory Categories
Cameras Camcorders DVDs
Cost Data
$12,500 9,000 13,000
Market Data
$13,400 9,500 12,200
Compute the lower-of-cost-or-market valuation for Olsson inventory.