JCPenney reports merchandise inventory in the Current Assets section of the balance sheet in its 2008 annual report as follows (amounts in millions of dollars): XXXXXXXXXXMerchandise inventory (net of...

JCPenney reports merchandise inventory in the Current Assets section of the balance sheet in its 2008 annual report as follows (amounts in millions of dollars): 2008 2007 Merchandise inventory (net of LIFO reserves of $2 and $1) $3,259 $3,641 Required 1. What method does JCPenney use to report the value of its inventory? 2. What is the amount of the LIFO reserve at the end of each of the two years? 3. Explain the meaning of the increase or decrease in the LIFO reserve during 2008. What does this tell you about inventory costs for the company? Are they rising or falling? Explain your answer.