Adjustments to Lower of Cost and NRV
the Controller of Utah

question 25

Essay

Adjustments to lower of cost and NRV
The controller of Utah Corp. has provided you with the following information relating to its inventory:
$$\begin{array} { c c c } \text { Date } & \text { Cost } & \text { Lower of cost and NFN } \\\operatorname { Dec } 31 / 17 & \$ 457,000 & \$ 410,000 \\\operatorname { Dec } 31 / 18 & \$ 615,000 & \$ 555,000\end{array}$$ Utah uses the periodic inventory system, and records its inventory at cost. An allowance account is adjusted at the end of each year to adjust the value of the inventory to the lower of cost and NRV.
Instructions
Prepare the journal entries that Utah would have prepared for its 2019 and 2020 year ends, assuming that 2019 was its first year of operations.

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Definitions:

Individual Vulnerability

The specific characteristics or factors that make an individual more susceptible to developing a disorder or disease.

Disorder

A disruption to regular bodily structures and functions, often leading to symptoms that affect health and daily life.

Psychopaths

Individuals with a personality disorder characterized by persistent antisocial behavior, impaired empathy and remorse, and bold, disinhibited, and egotistical traits.

Fearless

Lacking fear, bold or brave in the face of potential danger or pain.