The journal entry to write-down inventory under the lower of cost or market (LCM) rule results in a debit to cost of goods sold and a credit to inventory.

Question

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This is correct. When inventory is written down under the lower of cost or market (LCM) rule, the cost of goods sold account is debited and the inventory account is credited. This is done to account for the decrease in the value of the inventory, which is necessary to properly reflect the company's financial position.

The Journal Entry to Write-Down Inventory Under the Lower of Cost