During a recession, a manufacturing company using a perpetual inventory system wrote down its inventory that cost $5.0 million to the net realizable value of $4.5 million. Two years later this inventory was still available for sale; however, its net realizable value had increased to $5.5 million. Using the LCNRV rule, what is the correct journal entry to record this change in value? Select answer from the options below Debit: Cost of Goods Sold, $1 million; Credit: Gain on Inventory Valuation, $1 million Debit: Inventory, $500,000; Credit: Cost of Goods Sold, $500,000 Debit: Gain on Inventory Valuation, $500,000; Credit: Cost of Goods Sold, $500,000 Debit: Inventory, $1 million; Credit: Gain on Inventory Valuation, $1 million

During a recession, a manufacturing company using a perpetual inventory system wrote down its inventory that cost $5.0 million to the net realizable value of $4.5 million. Two years later this inventory was still available for sale; however, its net realizable value had increased to $5.5 million. Using the LCNRV rule, what is the correct journal entry to record this change in value? Select answer from the options below Debit: Cost of Goods Sold, $1 million; Credit: Gain on Inventory Valuation, $1 million Debit: Inventory, $500,000; Credit: Cost of Goods Sold, $500,000 Debit: Gain on Inventory Valuation, $500,000; Credit: Cost of Goods Sold, $500,000 Debit: Inventory, $1 million; Credit: Gain on Inventory Valuation, $1 million

Individual Income Taxes

43rd Edition

ISBN:9780357109731

Author:Hoffman

Publisher:Hoffman

Chapter18: Accounting Periods And Methods

Section: Chapter Questions

Problem 67P

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