2) Hougton Company follows U.S. GAAP and has the following inventory data available:

Item	Cost	Selling Price	Disposal Costs	Current Replacement Cost	Normal Profit
Men Shirt 1	$10	$36	$16	$15	$8
Men Shirt 2	20	23	4	18	2
Women Shirt 3	5	6	3	4	1
Women Shirt 4	8	20	5	12	4

The company has 1,000 shirts of each style in stock at year end.

Required: 1.a. & b. Total 4 Points

1. a. Determine the value of inventory reported on the balance sheet at year end if the lower-of-cost-or-market rule is applied to each inventory item.

b. Prepare the journal entry required at year end.