(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.
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.