Exhibit 8-3 The J. Love Company Uses a Periodic Inventory Accounting System

question 96

Short Answer

Exhibit 8-3
The J. Love Company uses a periodic inventory accounting system and values its inventory by using the lower of cost or NRV rule. The allowance method is used in applying the lower of cost or NRV rule. The company adjusts and closes its books annually on December 31. Below are the cost and market values of the company's year-end inventories for a three-year period:
-Refer to Exhibit 8-3. Which of the following journal entries would be correct as of December 31, 2019, to apply the lower of cost or market rule to the valuation of inventory?

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Definitions:

Environmental Forces

External factors, including social, economic, technological, competitive, and regulatory forces, that can affect an organization's operations and business decisions.

Marketing Activities

Actions undertaken by a company to promote and sell its products or services, including advertising, sales promotions, and public relations.

Marketing Department

A division within a company responsible for promoting products or services, brand management, and market research.

Crossover SUV

A type of sports utility vehicle that features a unibody construction, blending features of passenger cars with those of traditional SUVs for increased efficiency and comfort.