ills Test: 80 pls possi ariah Company has inventory at the end of the year with

Question

ills Test: 80 pls possi ariah Company has inventory at the end of the year with a historical cost of $9,000 Mariah Cmpany uses the perpetual inventory system Under the LCM rule, the current eplacement cost is $75,600. Under U.S GAAP, the journal entry to record the write-down to LCM will O A. debit Cost of Goods Sold for $19,400 and credit Purchases for $19,400 O B. debit Cost of Goods Sold for $19,400 and credit Inventory for $19,400 O C. debit Purchases for $19,400 and credit Cost of Goods Sold for $19,400 O D. debit Inventory for $19,400 and credit Cost of Goods Sold for $19,400

Explanation / Answer

Journal entry to record the write down to LCM :

so answer is b) debit cost of goods sold for $19400 and credit inventory for $19400

date accounts & explanation debit credit Cost of goods sold a/c (95000-75600) 19400        Inventory a/c 19400 (To record write down to LCM)

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