Sanchez Company was formed on January 1 of the current year and is preparing the annual financial statements dated December 31, current year. Ending inventory information about the four major items stocked for regular sale follows: ENDING INVENTORY, CURRENT YEAR Net Realizable Quantity Unit Cost When Value (Market) on Hand Acquired (FIFO) at Year-End 30 $20 $15 Item A B 55 40 44 35 52 55 D 15 27 32 ar? Required 1: Compute the valuation that should be used for the current year ending inventory using lower of cost or net realizable value applied on an item-by-item basis. Item Quantity Total Cost Total Net Realizable Value Lower of Cost or NRV 30 B 55 35 D 15 Total $0 50 Required 2: What will be the effect of the write-down of inventory to lower of cost or net realizable value on cost of goods sold for the year ended December 31, current year? The write-down to lower of cost or net realizable value will: cost of goods sold expense by the amount of the write-down