1. At December 31, YR05 Ford Co. gathered the following facts about its inventory:

2. On September 1, YR05, Bose Co. purchased 16 units of inventory from its supplier for $6 each. In the period of October-December, Bose sold 4 of these units for $9 each. At December 31, YR05, Bose had 12 units left and determined that the supplier had reduced the price of these inventory items to $5 each (replacement cost). Bose expects to continue selling the units for $9 each. Given these facts, the year end adjusting entry needed under the lower-of-cost-or-market rule would be:

a. no adjustment is needed since the expected sales price exceeds historical cost.
b. debit inventory $12, credit hain on prive appreciation $12
c. debit gain on price appreciation $12, credit inventory $12.
d. credit cost of goods sold for $12, debit inventory for $12.
e. debit cost of goods sold for $12, credit inventory for $12.

3. When a company uses the FIFO inventory costing method, the unit costs used to compute cost of goods sold and ending inventory are determined by the unit costs of which inventory purchases?