Problem #$1(20$ points$)$

Data for Sports Inc. inventory of exercise equipment are as follows:

Selling price $$350$

Cost $$260$

Replacement cost $$330$

Selling costs $$66$

Normal gross profit ratio $30\%$

Required:

a$.$ What is the value of the inventory if the $$lower of cost or market$$ rule is applied?

b$.$ What is the value of the inventory if the $$lower of cost or net realizable value$$ rule is applied?

c$.$ What companies would apply the $$lower of cost or net realizable value$$ rule?