Trade Mart has recently had lackluster sales. The rate of inventory turnover has dropped, and the merchandise is gathering dust. At the same time, competition has forced 's suppliers to lower the prices that will pay when it replaces its inventory. It is now December 31, , and the net realizable value of 's ending inventory is below what the company actually paid for the goods, which was . Before any adjustments at the end of the period, the Cost of Goods Sold account has a balance of . Read the requirementsLOADING Requirement a. What accounting action should take in this situation? should apply the ▼ average-cost method first in, first out method last in, first out method lower-of-cost-or-market rule to account for inventories. The net realizable value of ending inventory is ▼ equal to less than more than 's actual cost, so must write the inventory ▼ down up to net realizable value.

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Trade Mart has recently had lackluster sales. The rate of inventory turnover has? dropped, and the merchandise is gathering dust. At the same time, competition has forced Trade Mart's suppliers to lower the prices that Trade Mart will pay when it replaces its inventory. It is now December 31, 2016, and the current replacement cost Trade Mart's ending inventory is $75,000 below what Trade Mart actually paid for the goods, which was $200,000.

Before any adjustments at the end of the? period, the Cost of Goods Sold account has a balance of $$820,000.

a. What accounting action should take in this situation?

the adjustment entry should be:

Dr Cost of goods sold 75,000

    Cr Inventory 75,000

b. The net realizable value of ending inventory is?

Ending inventory = $200,000 - $75,000 = $125,000

answer is a

explanation:

the answer is b for dog