Central Incorporated has two items in inventory as of December 31, 2011. Each item was purchased for
Question:
a. Prepare journal entries for each activity (ie., the write-down, the sale of Item #1, and the sale of Item #2).
b. compute the profi9t or loss associated with each item in 2011 and 2012.
c. Explain how management could manipulate reported earnings when applying the lower-of-cost-or-market rule.
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