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Home Stop sells two product categories, furniture and accessories. Information pertaining to its 2021 year-end inventory is as follows:
Inventory, by Product Category Furniture: Chairs Desks Tables Accessories: Rugs Lamps Per Unit Quantity Cost Market $25
Required:
1. Determine the carrying value of inventory at year-end, assuming the lower of cost or market (LCM) rule is applied to (a) individual products, (b) product categories, and (c) total inventory.
2. Assuming inventory write-downs are common for Home Stop, record any necessary year-end adjusting entry for each of the LCM applications in requirement 1.
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