(L. OBJ. 5) Applying the lower-of-cost-or-market rule to inventories [5 min] Rapid Reso...

(L. OBJ. 5) Applying the lower-of-cost-or-market rule to inventories [5 min]

Rapid Resources, which uses the FIFO method, has the following account balances at December 31, 2012, prior to releasing the financial statements for the year:

Rapid has determined that the replacement cost (current market value) of the December 31, 2012, ending inventory is $12,500.

Requirements

1. Prepare any adjusting journal entry required from the information given.

2. What value would Rapid report on the balance sheet at December 31, 2012, for inventory?