Best Supply Uses the Perpetual Inventory Method

Essay

Best Supply uses the perpetual inventory method. At the end of the year Best Supply had the following items in inventory. Required:
a) Determine the amount of inventory Best Supply is showing on its books before any adjustment.
b) Determine the amount of ending inventory using lower of cost or market applied to each individual item.
c) Prepare the journal entry necessary to adjust inventory.
d) Determine the amount of ending inventory using lower of cost or market applied to total inventory in aggregate.
e) Which method (individual items or aggregate) produces the smallest amount of total assets?