(a) Blank Company sells three different categories of tools (small, medium and large).The cost and market value of its inventory of tools are as follows.

Determine the value of the company’s inventory under the lower-of-cost-or-market approach.

(b) Audio Company understated its 2010 ending inventory by $31,000. Determine the impact this error has on ending inventory, cost of goods sold, and owner’s equity in 2010 and 2011.

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Cost Market Small $ 64,000 290,000 152,000 $ 73,000 Medium Large 171,000