Home Stop sells two product categories, furniture and accessories. Information pertaining to its year-end inventory is as follows: Inventory, by Product Category Quantity Per Unit Cost Market Furniture: Chairs 70 $ 29 $ 35 Desks 70 77 62 Tables 20 88 96 Accessories: Rugs 40 64 52 Lamps 40 26 22

Required:

1. Determine the carrying value of inventory at year-end, assuming the lower of cost or market (LCM) rule is applied to (a) individual products, (b) product categories, and (c) total inventory.

2. Assuming inventory write-downs are common for Home Stop, record any necessary year-end adjusting journal entry for each of the LCM applications in requirement 1.