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andhill Wig Shoppe carries a number of wigs that are made specifically for people who require them while undergoing medical treatment. They use a perpetual inventory system and the FIFO cost formula for valuing inventory. The following information is available regarding the inventory on hand at year end, December 31.

Types:		Units			Unit Cost			Unit Net Realizable Value
Marilyn		12			$141			$138
Farrah		11			208			228
Jane		7			65			70
J-Lo		8			203			218
Cpt. Kirk		9			165			116

Assuming Sandhill values each type of wig separately, determine the lower of cost and net realizable value of the ending inventory.

Lower of cost and net realizable value

$

Prepare the journal entry required, if any, to record the adjustment at year end. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Date	Account Titles and Explanation	Debit	Credit
Dec-31
	(To record the decline in inventory value.)

Now assume Sandhill combines all wigs together for the purposes of determining LCNRV. What amount should be reported on Sandhills balance sheet at year end?

Value of inventory

$

Assume Sandhill made the required journal entry at year end based on the LCNRV as determined in part (a). Shortly after year end, as the economy recovered, it was determined that the NRV of this inventory had increased by $642. Prepare the journal entry required, if any, to record this recovery. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Date	Account Titles and Explanation	Debit	Credit
Jan-31
	(To record the recovery in inventory value.)

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