The journal entry to write down inventory under the lower of cost or net realizable value rule results in a debit to cost of goods sold and a credit to inventory.

Question

Quizplus · Accepted Answer

This is the correct journal entry to write down inventory under the lower of cost or net realizable value rule. The debit to cost of goods sold recognizes the decrease in the value of the inventory, and the credit to inventory reduces the carrying value on the balance sheet.

The Journal Entry to Write Down Inventory Under the Lower