The Seaman Company’s ending inventory of vacuum cleaner parts included the following items:

Item # Number of Units Unit Cost (FIFO) Unit Replacement Cost A12B 50 $100 $90 LI5C 150 76 82 P27X 200 60 55 Wo08S 400 10 9 Required: (1) Compute the value of the ending inventory under the lower-of-cost-ormarket method.

(2) Using T-accounts, prepare the entry to record the reduction of the inventory to its market value.

(3) Show how the ending inventory would be reported on the company’s balance sheet.

(4) If, at the end of the next year, none of the items in inventory has a market value below cost, how will the income statement for that year be affected by the application of the lower-of-cost-or-market method in this year?

 TYK-1