Sullivan corporation has determined its year-end inventory on a FIFO basis to be $450,000. Selling price of inventory is $520,000; while costs to sell consist of sales commission equal to 10% of selling price and shipping costs equal to 5% of cost. Replacement cost of the item is $300,000. The normal profit is 20% of the selling price.

Required:

What should be the reported value of Sullivan's inventory when applying:

a. Lower cost or net realizable value rule?

b. lower cost or market (LCM) rule?

c. Assuming LCM is applied, prepare the journal entry (if any) to record any write-down assuming write-down is common. Write N/A if a journal entry is not needed.