Why score: $10\mathrm{.}3/15$ pts $(83\mathrm{.}64\%)$

ANE Trade Mart has recently had lacklustre sales. The rate of inventory turnover has dropped, and the merchandise is gathering dust. At the same time, competition has forced ANE's suppliers to lower the prices that ANE will pay when it replaces its invertory, It is now year$-$end, and the current net realizable value of ANE's ending inventory is $$95,000$ below what ANE actually paid for the goods, which was $$240,000.$ Before any adjustments at the end of the period, the Cost of Goods Sold account has a balance of $$820,000.$

Identify and explain how accounting standards apply to inventory. Include in your answer how the information that is relevant to invertory is reported in ANE's financial statements.

ANE's actual cost, so ANE must write down the inventory to net realizable value.

Record the required journal entry for December $31.($Record debits first, then credits. Exclude explanations from journal entries.$)$

$\backslash$table$[[$Date$,$Account Titles,Credit$],[$December $31,$Cost of Goods Sold Inventory,$95,000],[$ANE should report the inventory at net realizable value on the balance sheet at: ANE should report cost of goods sold on the income statement at:$,\backslash$table$[[$$ $145,000],[$$ $915,000]]]]$

$$ are the reasons to account for inventory at $$ These

characteristics direct accountants to write inventory down if cost appears unrealistically high. In this case, the net realizable value $($market value$)$ of ANE's ending inventory is cost$.$ Under the $$ this requires $$ of the inventory value to net realizable value.