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mulligan imports resells five major brands of golf clubs which are noted in the foll 635706

Mulligan Imports resells five major brands of golf clubs, which are noted in the following table. At the end of its reporting year, Mulligan calculates the lower of its cost or net realizable value in the following table:

Product Line

Quantity on Hand

Unit Cost

Inventory at Cost

Market Per Unit

Lower of Cost or Market

Free Swing

1,000

$190

$190,000

$230

$190,000

Golf Elite

750

140

105,000

170

105,000

Hi-Flight

200

135

27,000

120

24,000

Iridescent

1,200

280

336,000

160

192,000

Titanium

800

200

160,000

215

160,000

Based on the table, the market value is lower than cost on the Hi-Flight and Iridescent product lines. Consequently, Mulligan recognizes a loss on the Hi-Flight product line of $3,000 ($27,000 – $24,000), as well as a loss of $144,000 ($336,000 – $192,000) on the Iridescent product line.

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