Given the following information for the Raquel Company: $\begin{array}{ll}
\underline{\text { Market }} & \underline{\text { Cost }} &\underline{\text {Date}}\
\$500&\$500&\text {December 31,2014}\
650 & 700& \text {December 31, 2015}\
730 & 800&\text {December 31,2016}
\end{array}$
Under the periodic system, if the direct method of recording lower of cost or market is in use, which December 31, 2016 entry is correct?

Question

Given the following information for the Raquel Company: $\begin{array}{ll}
\underline{\text { Market }} & \underline{\text { Cost }} &\underline{\text {Date}}\
\$500&\$500&\text {December 31,2014}\
650 & 700& \text {December 31, 2015}\
730 & 800&\text {December 31,2016}
\end{array}$
 Under the periodic system, if the direct method of recording lower of cost or market is in use, which December 31, 2016 entry is correct?

Quizplus · Accepted Answer

Under the direct method, inventory is recorded at the lower of cost or market value. On December 31, 2016, the market value is $730, which is lower than the cost of $800, so inventory should be recorded at $730.

Given the Following Information for the Raquel Company Under the Periodic System, If the Direct Method of Recording