Applying the lower-of-cost-or-market rule to inventories
Richmond Sporting Goods, which uses the FIFO method, has the following account balances at August 31, 2012, prior to releasing the financial statements for the year:
Cost of goods sold
Richmond has determined that the replacement cost (current market value) of the August 31, 2012, ending inventory is $13,500.
1. Prepare any adjusting journal entry required from the information given.
2. What value would Richmond report on the balance sheet at August 31, 2012, for inventory?