Lower-of-cost-or-market rule
Wygal Company carries three inventory items. The following information pertains to the ending inventory:
Item | Quantity | Unit Cost | Unit Market Value |
B | 100 | $40 | $36 |
C | 150 | 60 | 56 |
D | 90 | 20 | 30 |
Required
a. Determine the ending inventory that Wygal will report on the balance sheet, assuming that it applies the lower-of-cost-or-market rule to individual inventory items.
b. Prepare the necessary journal entry, assuming the decline in value was immaterial.
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