At 12/31/20, the end of Sandhill Company's first year of business, inventory was $6,600 and $5,100 at cost and at market, respectively. Following is data relative to the 12/31/21 inventory of Jenner:

Item		Original Cost Per Unit			Replacement Cost
A		$0.55			$0.40
B		0.50			0.45
C		0.90			0.95
D		0.60			0.50
E		0.70			0.65

Selling price is $1.00/unit for all items. Disposal costs amount to 10% of selling price and a "normal" profit is 30% of selling price. There are 1,400 units of each item in the 12/31/21 inventory.

(a)

Prepare the entry at 12/31/20 necessary to implement the lower-of-cost-or-market procedure assuming Sandhill uses a contra account for its balance sheet. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.)

Date	Account Titles and Explanation	Debit	Credit
12/31/20