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    fustrated's Avatar
    fustrated Posts: 18, Reputation: 2
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    #1

    Dec 3, 2007, 07:25 AM
    what journal entries for inventory adjustment
    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
    CaptainForest's Avatar
    CaptainForest Posts: 3,645, Reputation: 393
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    #2

    Dec 4, 2007, 02:21 PM
    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
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