Question

At the end of the year, inventory has a cost of $200,000 and a net realizable value of $195,000 due to normal business circumstances. Prepare the year-end adjusting entry, if any, for inventory using the lower of cost or net realizable value approach. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Answer 1

Answer:

The answer is given below;

Explanation:

The adjusting entry will be;

Income Statement             Dr.$5,000

Inventory                             Cr.$5,000

As the NRV is less than cost,therefore difference amount will be charged to profit and loss account.