Use the following information for questions

-Peak's 2010 entry to record to adjust its inventory from cost to the lower of cost and net realizable value (NRV) is
A)Debit: "Loss-NRV" and credit: "Allowance-NRV" $50,000
B)Debit: "Allowance-NRV" and credit: "Loss-NRV" $50,000
C)Debit: "Loss-NRV" and credit: "Inventory" $50,000
D)Debit: "Inventory" and credit: "Loss-NRV" $50,000

Question

Use the following information for questions 
 
-Peak's 2010 entry to record to adjust its inventory from cost to the lower of cost and net realizable value (NRV) is
A)Debit: "Loss-NRV" and credit: "Allowance-NRV" $50,000 
B)Debit: "Allowance-NRV" and credit: "Loss-NRV" $50,000 
C)Debit: "Loss-NRV" and credit: "Inventory" $50,000 
D)Debit: "Inventory" and credit: "Loss-NRV" $50,000

Quizplus · Accepted Answer

The correct entry is to debit "Loss-NRV" and credit "Allowance-NRV" for $50,000. This entry will reduce the inventory balance to the lower of cost and NRV and create an allowance for the unrealized loss.

Use the Following Information for Questions