(a) Kiele Company sells three different categories of tools (small, medium, and large). The cost and fair value of its inventory of tools are as follows.
|
Cost |
Fair Value |
|
|
Small |
$ 64,000 |
$ 73,000 |
|
Medium |
290,000 |
260,000 |
|
Large |
152,000 |
171,000 |
Determine the value of the company’s inventory under the lower of cost or market approach.
(b) Sanchez Company understated its 2011 ending inventory by $31,000. Determine the impact this error has on ending inventory, cost of goods sold, and owner’s equity in 2011 and 2012.