Applying the lower-of-cost-or-market rule to inventories [5 min]Eagle Resources, which use...

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.

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