Sage Co. follows the practice of valuing its inventory at the lower-of-cost-or-market. The following information is available from the company’s inventory records as of December 31, 2020. Item   Quantity   Unit Cost   Replacement Cost/Unit   Estimated Selling Price/Unit   Completion & Disposal Cost/Unit   Normal Profit Margin/Unit A   1,600   $8.33   $9.32     $11.66     $1.67     $2.00   B   1,300   9.10   8.77     10.43     1.00     1.33   C   1,500   6.22   5.99     7.99     1.28     0.67   D   1,500   4.22   4.66     6.99     0.89     1.67   E   1,900   7.10   6.99     7.44     0.78     1.11   Greg Forda is an accounting clerk in the accounting department of Sage Co., and he cannot understand why the market value keeps changin

Sage Co. follows the practice of valuing its inventory at the lower-of-cost-or-market. The following information is available from the company’s inventory records as of December 31, 2020.

Item
 
Quantity
 
Unit Cost
 
Replacement
Cost/Unit
 
Estimated Selling
Price/Unit
 
Completion & Disposal
Cost/Unit
 
Normal Profit
Margin/Unit
A   1,600   $8.33   $9.32     $11.66     $1.67     $2.00  
B   1,300   9.10   8.77     10.43     1.00     1.33  
C   1,500   6.22   5.99     7.99     1.28     0.67  
D   1,500   4.22   4.66     6.99     0.89     1.67  
E   1,900   7.10   6.99     7.44     0.78     1.11  

Greg Forda is an accounting clerk in the accounting department of Sage Co., and he cannot understand why the market value keeps changing from replacement cost to net realizable value to something that he cannot even figure out. Greg is very confused, and he is the one who records inventory purchases and calculates ending inventory. You are the manager of the department and an accountant.

 
 
 
 
 
Calculate the lower-of-cost-or-market using the individual-item approach.

   
Lower-of-Cost-or-Market
(Per unit basis)
Item A  
$

 
Item B  
$

 
Item C  
$

 
Item D  
$

 
Item E  
$

 
 
 

 
 
 
 
Show the journal entry he will need to make in order to write down the ending inventory from cost to market. (Credit account titles are automatically indented when 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.)

Account Titles and Explanation
Debit
Credit
Cost of Goods sold Method:    
 
 
 
 
 
 
The Loss method:    
 
 
 
 
 
 
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