Cornerstone Exercise 6-26 (Algorithmic) Lower of Cost or Market The accountant for Murphy Company prepared the following analysis of its inventory at year end: Item Cost per Unit Net Realizable Value Units 540 RSK-89013 $38 $44 LKW-91247 329 QEC-57429 462 Required: 1. Compute the carrying value of the ending inventory using the lower of cost or market method applied on an item-by-item basis. $ 48,191 X Feedback Check My Work 1. Compare actual cost of inventory to its market value. The lower amount is the value of inventory. If market value is lower, the inventory account is adjusted. 2. Prepare the journal entry required to value the inventory at lower of cost or market. Accounts Receivable x 48,191 Inventory 48,191 X (Inventory adjustment to market value) Feedback