(a) Tracy Company sells three different types of home heating stoves (wood, gas, and pellet). The cost and market value of its inventory of stoves are as follows.
|
Cost |
Market |
|
|
Gas |
$ 84,000 |
$ 79,000 |
|
Wood |
250,000 |
280,000 |
|
Pellet |
112,000 |
101,000 |
Determine the value of the company’s inventory under the lower of cost or market approach.
(b) Visual Company overstated its 2011 ending inventory by $22,000. Determine the impact this error has on ending inventory, cost of goods sold, and owner’s equity in 2011 and 2012.