Applying the lower-of-cost-or-market rule to inventories [5 min]
Eagle Resources, which uses the FIFO method, has the following account balances at May 31, 2012, prior to releasing the financial statements for the year:
Eagle has determined that the replacement cost (current market value) of the May 31, 2012, ending inventory is $12,800.
Requirements
1. Prepare any adjusting journal entry required from the information given.
2. What value would Eagle report on the balance sheet at May 31, 2012, for inventory?
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