Determine the final lower of cost or market inventory

Question

Question 1: Robin Corporation has the following four items in its inventory:

Item            Cost            Replacement Cost              Net Realizable Value          NRV less Norm Profit Margin

Jokers          2,000                 1,900                                  2,100                                           1,600

Penguins      5,000                 5,100                                   4,950                                           4,100

Riddlers       4,400                 4,550                                   4,625                                           3,700

Scarecrows  3,200                 2,990                                   3,830                                           3,070

Determine the final lower of cost or market inventory value for each item.

Question 2: Battletoads Inc. uses a perpetual inventory system. At January 1, 2008, inventory was $214,000 at both cost and market value. At December 31, 2008, the inventory was $286,000 at cost and $269,000 at market value. Prepare the necessary December 31 entry under (a) the direct method and (b) the indirect method.