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 RSK-89013 460 $38 $44 LKW-91247 329 49 45 QEC-57429 462 25 33 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. 14,805 Feedback Check My Wark 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 1316 Inventory V 1,316 (Inventory adjustment to market value)