Alpaca Enterprises Inc. has an inventory balance of $156,000. At year end, the market value of Alpaca's

Question:

Alpaca Enterprises Inc. has an inventory balance of $156,000. At year end, the market value of Alpaca's inventory has fallen to $151,500.
Required
Prepare the journal entry that Alpaca should make at year end regarding its inventory balance and identify the accounting principle that makes the entry necessary.