The information shown below relating to the ending inventory was taken at lower of cost or NRV from the records of Electronics Corp.:

Required:

1. Determine the valuation of the above inventory at cost and at lower of cost or NRV, assuming application of lower of cost or NRV valuation by (a) individual items, and (b) classifications.

2. Give the entry to record the writedown, if any, to reduce ending inventory to lower of cost or NRV. Use the allowance method.

3. Of the two applications described in requirement 2 above, which one appears preferable in this situation? Explain.

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Per Unit Inventory Classification Quantity Cost NRV Keyboards Stock A 12 $94 $80 Stock B 20 76 70 Stock C 18 100 110 Hard drives Stock X 30 180 170 Stock Y 60 160 180 CD burners Stock D 60 76 66 Stock É 200 100 116