Tatum Company has four products in its inventory. Information about the December 31, 2021, inventory is as follows: Product Total Cost Total
Replacement Cost Total Net
Realizable Value
101 $ 120,000 $ 100,000 $ 100,000
102 90,000 85,000 110,000
103 60,000 40,000 50,000
104 30,000 28,000 50,000

The normal profit is 25% of total cost.

Required:
1. Determine the carrying value of inventory at December 31, 2021, assuming the lower of cost or market (LCM) rule is applied to individual products.
2. Assuming that inventory write-downs are common for Tatum Company, record any necessary year-end adjusting entry.