Given the Following Information for the Raquel Company Under the Periodic System, If the Direct Method of Recording

question 28

Multiple Choice

Given the following information for the Raquel Company: $\begin{array}{ll}\underline{\text { Market }} & \underline{\text { Cost }} &\underline{\text {Date}}\\\$500&\$500&\text {December 31,2014}\\650 & 700& \text {December 31, 2015}\\730 & 800&\text {December 31,2016}\end{array}$
Under the periodic system, if the direct method of recording lower of cost or market is in use, which December 31, 2016 entry is correct?

• A) Loss Due to Market Valuation 20
• Allowance to Reduce Inventory to Market 20
• B) Inventory 730
• Income Summary 730
• C) Loss Due to Market Valuation 70
• Allowance to Reduce Inventory to Market 70
• D) Inventory 800
• Income Summary 800