Sue Stone, the president of Tippecanoe Home Products, has prepared the following information for the company's television inventory at the end of 2019:

Required:
1. Determine the carrying amount of the inventory using lower of cost or market applied on an item-by-item basis.
2. Prepare the journal entry required to value the inventory at lower of cost or market.
3. What is the impact of applying the lower of cost or market rule on the financial statements of the current period? What is the impact on the financial statements of a subsequent period in which the inventory is sold?

Transcribed Image Text:

FIFO Cost per Unit Selling Price Disposal Costs $35 30 Quantity Model Model per Unit T-260 $480 330 250 290 15 28 $250 S-256 R-193 Z-376 325 210 20 15 20 40 285