At December 31, Hardball Company has ending inventory with a historical cost of $316,000 and the company uses the perpetual inventory system. The current replacement cost of the inventory is $306,500 with a net realizable value is $325,000. The normal profit on this inventory is $25,000. Before any adjustments at the end of the period, the cost of goods sold account has a balance of $450,000. Which of the following journal entries is required on December 31 to adjust the ending balance of inventory if the direct method is used to record the lower of cost or market write down? a. Cost of Goods Sold $9,000 $9,000
Inventory
b. Inventory Cost of Goods Sold $9,000 $9,000
c. Cost of Goods Sold $9,500 $9,500 Inventory
d. Loss on inventory write down Inventory $9,500 $9,500