Valuing Inventory at Lower of Cost or Market Management of Tarry Company reports the following inventory using LIFO and applies the lower of cost or market rule. Edgers: 1,560 units in inventory; cost is $22 each; replacement cost is $16 each; estimated sale price is $30 each; estimated distribution cost is $3 each; and normal profit is 10% of sale price. Clippers: 1,040 units in inventory; cost is $50 each; replacement cost is $36 each; estimated sale price is $90 each; estimated distribution cost is $28 each; and normal profit is 20% of sale price. Required a. Determine the inventory cost to report on the balance sheet assuming that the company applies the lower of cost or market rule to each inventory item. b. Prepare the journal entry to apply the lower of cost or market rule to inventory assuming that the company adjusts inventory directly and adjusts equity through cost of goods sold. a. Inventory valuation for edgers $ Inventory valuation for clippers 34,320 45,760 80,080 Total inventory valuation b. $ Account Name Cost of Goods Sold Inventory To apply the lower of cost or market rule to inventory. Dr. 11,440 0 Cr. 0x 11,440 x

Valuing inventory at Lower of Cost or Market Management of Tarry Company reports the following inventory uung LIFo and applies the lower of cost or marifet rule - Fdgers: 1,560 units in inventory, cost is $22 eachy replacement cost is $16 each, estimuted sale price is 530 each, estimated datribution cost is 53 each, and normal profic is 10 of of sale. price. price. Required A. Determine the inventory cost to report on the balance shert assuming that the company apples the lower of cost or market nule to each invertory atem b. Prepare the journal entry to apply the lower of cost or mariet rule to imentory assuming that the company adjusts inventory directly and adjusts equity through cost of