B-08.08Doyle’s Art buys and sells paintings from emerging artists. The values of theworks are prone to fluctuate considerably based on the ever changing stature ofa particular artist. Following is a...

B-08.08Doyle’s Art buys and sells paintings from emerging artists. The values of theworks are prone to fluctuate considerably based on the ever changing stature ofa particular artist. Following is a listing of 6 paintings, along with their costs,estimated selling prices, and expected selling costs (inclusive of commissionsand shipping).PaintingFire on HillCost$EstimatedSellingPrice1,000 $EstimatedSellingExpense1,400 $400Horses in Aspen Grove2,500800100Baby’s First Smile3,0006,000500Endless War2,0002,200300Rain Drop on Cactus1,5002,500400Election Day Upset2,3001,600200(a)What unit value should be attached to each painting, assuming item-byitem application of the lower-of-cost-or-net-realizable-value rule?(b)Assuming an item-by-item application of the lower-of-cost-or-net-realizablevalue rule, what journal entry is needed to reduce Election Day Upset?(c)As a general rule, is the item-by-item approach required? Is the item-byitem approach the most "conservative?"(d)If an item of inventory is written down, but subsequently recovers in valueduring a subsequent year, can it be written back up?1B-08.082B-08.08(a)FireHorseBabyCostVs. "NRV":Expected sellingpriceSelling expenseNet realizable valueVALUE TO REPORT(b)(c)(d)3WarRainElectionB-08.084