QuestiOn 14 Mariah Company has inventory at the end of the year with a historica

Question

QuestiOn 14 Mariah Company has inventory at the end of the year with a historical cost of $85,000. Mariah Company uses the perpetual inventory system. Under the LCM rule, the current replacement cost is $68,400. Under U.S. GAAP, the journal entry to record the write-down to LCM will debit Inventory for $16,600 and credit Cost of Goods Sold for $16,600 debit Cost of Goods Sold for$16,600 and credit Purchases for $16,600 debit Purchases for $16,600 and credit Cost of Goods Sold for $16,600 debit Cost of Goods Sold for $16,600 and credit Inventory for $16,600 ventory is kept on the books at the historical cost and therefore does not need to be written down.

Explanation / Answer

Journal entry to written down :

so answer is d) Debit cost of goods sold for $16600 and credit inventory for $16600

Date accounts & explanation debit credit Cost of goods sold (85000-68400) 16600 Inventory 16600

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