The cost (FIFO method) of locus invontory at July 31, was $32,439. The market value at July 31, of this inventory was 31,833.

How do I do an adjusting journal entry for this?

Do I dr income summary and cr. Inventory and do I use lower of market cost?

Please help
Thank you
Fustrated

You need to record it at lower of cost or market.

It is on your book at 32,439.

The lower is 31,833.

Therefore you need to write your inventory down by the difference, or $606


Dr. Inventory Loss 606
Cr. Inventory 606