Mariah Company has inventory at the end of the year with a historical cost of $ 91 comma 000. Mariah Company uses the perpetual inventory system. Under the LCM rule, the current replacement cost is $ 71 comma 600. The company uses LIFO. Under U. S. GAAP, the journal entry to record the writeminusdown to LCM will:

Question

Business

Jaylon Chan

13 September, 04:46

Mariah Company has inventory at the end of the year with a historical cost of $ 91 comma 000. Mariah Company uses the perpetual inventory system. Under the LCM rule, the current replacement cost is $ 71 comma 600. The company uses LIFO. Under U. S. GAAP, the journal entry to record the writeminusdown to LCM will:

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Reuben Mcclure · Answer 1

Dr. Inventory Write down ... (91,000 - 71,600) ... $19,400

Cr. Inventory ... $19,400

Explanation:

The write down of the inventory value from at the end of the year with a historical cost of $ 91,000 to the current replacement cost is $ 71,600 will be recorded as follows:

Journal Entries

Dr. Inventory Write down ... (91,000 - 71,600) ... $19,400

Cr. Inventory ... $19,400

Being the write down of the value of inventory from historical cost to replacement cost at year end