A home improvement store carries the following items:

Required:
1. Compute the total cost of inventory.
2. Determine whether each inventory item would be reported at cost or market. Multiply the quantity of each inventory item by the appropriate cost or market amount and place the total in the €œLower-of-Cost-or-Market€ column. Then determine the total of that column.
3. Compare your answers in Requirement 1 and Requirement 2 and then prepare any necessary adjustment to write down inventory from cost to market value.
4. Discuss the financial statement effects of using lower-of-cost-or-market to reportinventory.

Cost Lower-of Market per (replacement cost) Cost-or er unit Market Inventorv Items Hammers Saws Screwdrivers Drills 1-gallon paint cans Paint brushers uantitv Unit 110 S 6.00 60 11.00 3.00 50 22.00 5.00 7.00 S 7.00 9.00 2.00 21.00 6.00 8.00 120 150 170