The following information pertains to Hagen Metal Work’s ending inventory for the current year:

The following information pertains to Hagen Metal Work’s ending inventory for the current year:

		Unit	Unit
Item	Quantity	Cost	Market Value
C	120	$ 11	$ 9
D	110	13	11
K	42	9	10
M	20	6	11

Required

a.

Determine the value of the ending inventory using the lower-of-cost-or-market rule applied to (1) each individual inventory item and (2) the inventory in aggregate.   b. Prepare any necessary journal entries, assuming the decline in value is immaterial, using the (1) individual method and (2) aggregate method. Hagen Metal Works uses the perpetual inventory system.    Explanation: a. Hagen Metal Works a. b. c. d. e. f. g. Item Quantity Cost Per Unit Mkt. Val. per Unit Total Cost (b × c) Total Market (b × d) Ind. Item Lower Cost/Mkt. (e or f) C 120       $ 11   $ 9   $ 1,320   $ 1,080   $ 1,080   D 110         13     11     1,430     1,210     1,210   K 42         9     10     378     420     378   M 20         6     11     120     220     120                                   $ 3,248   $ 2,930   $ 2,788                   1. Ending inventory using the individual item method: $2,788 2. Ending inventory using the aggregate method: $2,930 b. 1. Cost of goods sold: $3,248 – $2,788 = $460 2. Cost of goods sold: $3,248 – $2,930 = $318 Thank you!