I would like to know whether the answer I have chosen is correct or incorrect.

My answer: A

Question:

3. Given the following information for the Network Company: Date December 31, 2004 December 31,2005 December 31, 2006 Market $ 800 940 1,060 Cost 800 1,000 1,100 If the allowance method of recording lower of cost or market is in use, which December 31, 2006 entry is not correct? 40 20 20 20 Loss Due toMarket Valuation 40 20 20 20 Allowance to Reduce Inventory to Market b. Allowance to Reduce Inventory to Market c. Allowance to Reduce Inventory to Market d. Allowance to Reduce Inventory to Market Loss Recovery Due to Market Valuation Gain on Revaluation of Inventory to Market Cost of Goods Sold Note: b. is also correct