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Forest Company has five products in its inventory. Information about ending inventory follows: The cost to sell for each product consists of a 15 percent

Forest Company has five products in its inventory. Information about ending inventory follows:

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The cost to sell for each product consists of a 15 percent sales commission. The normal profit for each product is 40 percent of the selling price.

Required:

1. Determine the carrying value of ending inventory, assuming the lower of cost or market (LCM) rule is applied to individual products.

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2. Determine the carrying value of inventory, assuming the LCM rule is applied to the entire inventory.

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3. Assuming inventory write-downs are common for Forest, record any necessary year-end adjusting entry based on the amount calculated in requirement 2.

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ProductABCDEQuantity1,000800600200600UnitReplacementUnitCost$10153714UnitSellingCost$12112412Price$16188613 Inventory carrying value \begin{tabular}{|c|c|c|c|} \hline Transaction & General Journal & Debit & Credit \\ \hline 1 & & & \\ \hline & & & \\ \hline & & & \\ \hline & & & \\ \hline \end{tabular}

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