Ask Question
23 July, 22:52

Ace Manufacturing purchased merchandise inventory for $8,000. At the end of the accounting period it has a market value of $7,800. Using the lower-of-cost-or-market rule, what is the journal entry to record the adjustment

+2
Answers (1)
  1. 24 July, 02:30
    0
    Dr. Cr.

    Cost of Goods Sold $200

    Merchandise Inventory $200

    Explanation:

    Inventory is value at Lower of Cost and Net realizable value.

    Cost of Inventory = $8,000

    Net Realizable Value of Inventory = $7,800

    The lower value is the Net realizable value and Inventory should be reported by $7,800 on the balance sheet. The net difference of $200 is adjusted to bring the value of inventory to it net realizable value.

    Expense to be recorded = $8,000 - $7,800 = $200
Know the Answer?
Not Sure About the Answer?
Find an answer to your question ✅ “Ace Manufacturing purchased merchandise inventory for $8,000. At the end of the accounting period it has a market value of $7,800. Using ...” in 📘 Business if you're in doubt about the correctness of the answers or there's no answer, then try to use the smart search and find answers to the similar questions.
Search for Other Answers