At the end of the year, Ralph's Repair Service had the following items in inventory:

Required

a. Determine the amount of ending inventory using the lower-of-cost-or-market rule applied to each individual inventory item.

b. Provide the general journal entry necessary to write down the inventory based on Requirement \(a\). Assume that Ralph's Repair Service uses the perpetual inventory system.

c. Determine the amount of ending inventory, assuming that the lower-of-cost-or-market rule is applied to the total inventory in aggregate.

d. Provide the general journal entry necessary to write down the inventory based on Requirement \(c\). Assume that Ralph's Repair Service uses the perpetual inventory system.

e. Explain how the inventory loss would be reported when the periodic inventory system is used.

Transcribed Image Text:

Unit Item Quantity Cost Unit Market Value P1 80 $ 80 $ 90 221 P2 60 60 66 P3 100 140 130 P4 50 130 140