Inventory Items	Quantity	Unit Cost	Unit NRV
Vans	2	$23,000	$21,000
Trucks	5	17,200	16,200
2-door sedans	1	12,200	14,200
4-door sedans	6	16,200	19,200
Sports cars	2	33,000	36,000
SUVs	7	28,400	24,000

Because of recent increases in gasoline prices, the car dealership has noticed a reduced demand for its SUVs, vans, and trucks.

Required:

1. Compute the total cost of the entire inventory. 2. Determine whether each inventory item would be reported at cost or net realizable value (NRV). Enter the amount of either the Unit Cost or Unit NRV in the "Lower of Cost and NRV per unit" column and then multiply this amount by the quantity of each inventory item and enter it in the Total column. 3. Record any necessary adjusting entry to write down inventory from cost to net realizable value. 4. Determine the financial statement effects of using lower of cost and net realizable value to report inventory.

Determine the financial statement effects of using lower of cost and net realizable value to report inventory. (Make sure to enter amounts leading to account reduction with a minus sign.)

Income Statement:
Revenues			Expenses		=	Net Income
Balance Sheet:
Assets		=	Liabilities		+	Stockholders Equity

Record any necessary adjusting entry to write down inventory from cost to net realizable value. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)

No	Transaction	General Journal	Debit	Credit
1	1	Cost of Goods Sold
		Inventory

Required 2