The following values were obtained from the inventory records of the Robb Company, which has a fiscal year ending on December 31:

Required
1. Under what conditions does the company ignore the decline in inventory value below cost in its interim financial statements?
2. Assuming that the company records the market value, what is the journal entry to record the decline if the company uses the perpetual inventory system and the allowancemethod?

Transcribed Image Text:

Cost $10,000 12,000 Market $10,500 11,500 Inventory, January I. 2007 Inventory, March 31, 2007