Commodities Inventory Barley Feed & Grain holds 450,000 bushels of #2 yellow corn. Barley purchased the corn from farmers at an average price of $2.20 per bushel during November and December 2000.

a. By December 31, 2000, corn prices rose to $2.35 per bushel. At what amount should Barley Feed and Gain value its inventory? Why?

b. On January 31, 2001, corn prices dropped to $2.19 per bushel. At what amount should Barley Feed and Grain value the inventory in its financial statements prepared at January 31, 2001? Why?

c. Why are commodities often adjusted to market price, while other types of inventories are not?