Determine the value of the company’s inventory under the lower-of-cost-or-market approach. 1 answer below »

(a) Kiele Company sells three different categories of tools (small, medium, and large). The cost and fair value of its inventory of tools are as follows.

Cost

Fair Value

Small

$ 64,000

$ 73,000

Medium

290,000

260,000

Large

152,000

171,000

Determine the value of the company’s inventory under the lower-of-cost-or-market approach.

(b) Sanchez Company understated its 2011 ending inventory by $31,000. Determine the impact this error has on ending inventory, cost of goods sold, and owner’s equity in 2011 and 2012.

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