Financial & Managerial Accounting 3rd Edition by Charles Horngren,Harrison, Walter,Suzanne Oliver

Exercise 21

Applying the lower-of-cost-or-market rule
Assume that a Rocket Burger restaurant has the following perpetual inventory record for hamburger patties:

Requirements
1. At February 28, the accountant for the restaurant determines that the current replacement cost of the ending inventory is $447. Make any adjusting entry needed to apply the lower-of-cost-or-market rule. Inventory would be reported on the balance sheet at what value on February 28
2. Inventory would be reported on the balance sheet at what value if Rocket uses the average-cost method