Cornerstone Exercise 6-26 Lower of Cost or Market The accountant for Murphy Company prepared the following analysis of its inventory at year end: Units Net Realizable Value Item Cost per Unit 600 $38 $47 RSK-89013 420 LKW-91247 47 40 QEC-57429 510 26 32 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. 52,860 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. Cost of Goods Sold Inventory (Inventory adjustment to market value)