Management of Tarry Company reports the following inventory using LIFO and applies the lower of cost or
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Question:
Management of Tarry Company reports the following inventory using LIFO and applies the lower of cost or market rule.
Edgers: units in inventory; cost is $ each; replacement cost is $ each; estimated sale price is $ each; estimated distribution cost is $ each; and normal profit is of sale price.
Clippers: units in inventory; cost is $ each; replacement cost is $ each; estimated sale price is $ each; estimated distribution cost is $ each; and normal profit is of sale price.
Required
a Determine the inventory cost to report on the balance sheet assuming that the company applies the lower of cost or market rule to each inventory item.
b Prepare the journal entry to apply the lower of cost or market rule to inventory assuming that the company adjusts inventory directly and adjusts equity through cost of goods sold.
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