Forester Company has five products in its inventory. Informationabout the December 31, 2018, inventory follows.
| Product | | Quantity | | Unit
Cost | | Unit
Replacement
Cost | | Unit
Selling
Price |
| A | | 1,000 | | $ | 26 | | | $ | 28 | | | $ | 32 | |
| B | | 500 | | | 31 | | | | 27 | | | | 34 | |
| C | | 900 | | | 19 | | | | 18 | | | | 24 | |
| D | | 900 | | | 23 | | | | 20 | | | | 22 | |
| E | | 800 | | | 30 | | | | 28 | | | | 29 | |
|
The cost to sell for each product consists of a 10 percent salescommission. The normal profit percentage for each product is 35percent of the selling price.
Required:
1. Determine the carrying value of inventory atDecember 31, 2018, assuming the lower of cost or market (LCM) ruleis applied to individual products.
2a. Determine the carrying value of inventory atDecember 31, 2018, assuming the LCM rule is applied to the entireinventory.
2b. Assuming inventory write-downs are usualbusiness practice for Forester, record any necessary year-endadjusting entry.
