A company like Golf USA that sells golf-related inventory typically will have inventory items such as golf clothing and golf equipment. As technology advances the design and performance of the next generation of drivers, the older models become less marketable and therefore decline in value. Suppose that in the current year, Ping (a manufacturer of golf clubs) introduces the MegaDriver II, the new and improved version of the MegaDriver. Below are yearend amounts related to Golf USA’s inventory.

Required:

1. Calculate the total recorded cost of ending inventory before any adjustments.

2. Calculate ending inventory using the lower of cost and net realizable value.

3. Record any necessary adjustment to inventory.

4. Explain the impact of the adjustment in the financial statements.

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Inventory Quantity Unit Cost Unit NRV Shirts 35 $ 60 $ 70 MegaDriver 15 360 250 MegaDriver I| 30 350 420