Rustic Furnishings reports inventory using the lower of cost and net realizable value (NRV). Below is information related to its year-end inventory.

Inventory	Quantity	Unit Cost	Unit NRV
Furniture	300	$95	$110
Electronics	60	500	440

Required: 1. Calculate the total recorded cost of ending inventory before any adjustments. 2. Calculate ending inventory using the lower of cost and net realizable value. 3. Record any necessary adjusting entry for inventory. 4. Determine the impact of the adjusting entry in the financial statements.

\begin{tabular}{|l|l|l|l|} \hline Required 1 & Required 2 & Required 3 & Required 4 \\ \hline \end{tabular} Explain the impact of the adjusting entry in the financial statements. (Amounts to be deducted should be entered with minus sign.) \begin{tabular}{|c|c|c|c|c|} \hline \multicolumn{5}{|c|}{ Income Statement: } \\ \hline Revenues & - & Expenses & = & Net Income \\ \hline & & 3,600 & & \\ \hline 7 & & & & \\ \hline \multicolumn{5}{|c|}{ Balance Sheet: } \\ \hline Assets & = & Liabilities & + & StockholdersEquity \\ \hline(3,600) Inventory & & 7 & & \\ \hline 7 & & & & \\ \hline \end{tabular}