[This is a variation of E 9-3, modified to focus on the lower of cost or market.] Tatum Company has four products in its inventory. Information about the December 31, 2021, inventory is as follows:

The normal profit is 25% of total cost.

Required:
1. Determine the carrying value of inventory at December 31, 2021, assuming the lower of cost or market (LCM) rule is applied to individual products.
2. Assuming that inventory write-downs are common for Tatum Company, record any necessary year-end adjusting entry.

E 9-3

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Total Total Net Total Replacement Realizable Product Cost Cost Value $120,000 $100,000 $100,000 101 102 103 90,000 85,000 110,000 60,000 40,000 50,000 104 30,000 28,000 50,000