Answer:
Inventory write off = $5,000 Debit
Inventory = $5,000 Credit
Explanation:
given data
current inventory = 5,000 units
purchased = $6 per unit
Replacement cost = $5 per unit
solution
As here we know replacement cost fallen to $5 per unit which is lower than the cost of $6
so that amount realized from the sale of a unit is $5 so
so total adjustment required is
total adjustment required = ( $6 - $5 ) × 5000
total adjustment required = $5,000
so that
Entry required to write down inventory to its realizable value as
Inventory write off = $5,000 Debit
Inventory = $5,000 Credit
