At December 31, 2020 the Selig Company has ending inventory with a historical cost of...
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At December 31, 2020 the Selig Company has ending inventory with a historical cost of $634,000. Assume the company uses the FIFO perpetual inventory system. The expected sales price of the inventory is $617,000. Normal selling costs are $5,000. The normal profit on this inventory is $25,000. Selig uses the loss method to record any inventory adjustments. Which journal entry is required on December 31 to correctly record adjust the ending balance of inventory if the loss method is used? a) Debit Loss due to Decline in Inventory for $17,000 and credit Allowance to Adjust Inventory for $17,000. b) Debit Loss due to Decline in Inventory for $22,000 and credit Allowance to Adjust Inventory for $22,000. c) Debit Cost of Goods Sold for $22,000 and credit Inventory for $22,000. d) Debit Cost of Goods Sold for $17,000 and credit Inventory for $17,000
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