E$7-13($Algo$)$ Reporting Inventory at Lower of Cost or Net Realizable Value LO$7-4$

Sanchez Company was formed on January $1$ of the current year and is preparing the annual financial statements dated December $31,$ current year. Ending inventory information about the four major items stocked for regular sale follows:

ENDING INVENTORY, CURRENT YEAR

Item Quantity

on Hand Unit Cost When Acquired $($FIFO$)$ Net Realizable Value $($Market$)$ at Year$-$End

A $29$ $ $19$ $ $24$

B $644953$

C $446664$

D $193641$

Required:

Compute the valuation that should be used for the current year ending inventory using lower of cost or net realizable value applied on an item$-$by$-$item basis.

What will be the effect of the write$-$down of inventory to lower of cost or net realizable value on cost of goods sold for the year ended December $31,$ current year?