J&J Enterprises sells paper cups to fast-food franchises. On January 1, 2019, J&J had 5,000 cups on hand, for which it had paid $0.10 per cup. During 2019, J&J made the following purchases and sales:

During 2019, J&J sold 240,000 cups at $0.35 per cup (80,000 cups were sold on April 2 and 160,000 cups were sold on October 20), leaving an ending inventory of 7,000 cups. Assume that J&J uses a perpetual inventory system. J&J uses the lower of cost or market for its inventories, as required by generally accepted accounting principles.
Required:
1. Assume that the market value of the cups is $0.38 per cup on December 31, 2019. Compute the cost of ending inventory using the FIFO and average cost methods, and then apply LCM.
2. Assume that the market value of the cups is $0.12 per cup on December 31, 2019. Compute the cost of ending inventory using the FIFO and average cost methods, and then apply LCM.

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Cost per Unit $0.12 0.14 Total Cost Units Date Feb. 20 May 15 Sept. 12 100,000 $12,000 7,980 12,750 85,000 0.15