The following data are available for Vortex Manufacturing Pty Ltd at 30 June 2020:

Inventory type	Cost	Net realisable value
Raw materials	$199,200	$212,420
Work in progress	171,900	162,950
Finished goods	290,400	263,880

Inventories are valued at the lower of cost and net realisable value. The value of inventory is derived by the method most appropriate to each particular class of inventory and the first-in-first-out basis is applied.

Required:

1. Explain the lower of cost and net realisable value basis of accounting for inventories. (3 marks)
2. Calculate the lower of cost and net realisable value for inventory. (3 marks)
3. Prepare the adjusting entry at 30 June 2020 to record any adjustments for the valuation of inventory. (2 marks)
4. Prepare an extract of the inventory note section for the 30 June 2020 financial statements. (2 mark)