Applying the lower of cost or market rule to inventories 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:
|
Inventory |
Cost of goods sold |
Sales revenue |
|||
|
Beg Bal |
12,500 |
||||
|
End Bal |
13,000 |
Bal |
69,000 |
Bal |
118,000 |
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?