Panel Install has 200 units of inventory that have a replacement cost of $4.90 per unit.The net realizable value of the inventory also declined.Originally this inventory cost $5.50 per unit from an order of 400.What entry is required?
A) Loss on inventory write-down $ \quad $$ \quad $$ \quad $$ \quad $$ \quad $120
$ \quad $Invertory $ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $120

B) Inventory $ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $ 120
$ \quad $Loss on inventorywrite-down $ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $120

C) CLoss on inventorywrite-down $ \quad $$ \quad $$ \quad $$ \quad $$ \quad $240
$ \quad $inventory $ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $240

D) Inventory $ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $240
$ \quad $Loss on inventorywrite-down $ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $ 240
E)Make no entry.

Question

Panel Install has 200 units of inventory that have a replacement cost of $4.90 per unit.The net realizable value of the inventory also declined.Originally this inventory cost $5.50 per unit from an order of 400.What entry is required? 
A) Loss on inventory write-down  $ \quad $$ \quad $$ \quad $$ \quad $$ \quad $120
$ \quad $Invertory $ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $120

B) Inventory $ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $ 120
$ \quad $Loss on inventorywrite-down $ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $120

C) CLoss on inventorywrite-down $ \quad $$ \quad $$ \quad $$ \quad $$ \quad $240
$ \quad $inventory    $ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $240

D) Inventory  $ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $240
$ \quad $Loss on inventorywrite-down  $ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $ 240
E)Make no entry.

Quizplus · Accepted Answer

The correct entry to record the inventory write-down is to debit the Loss on Inventory Write-down for $120 and credit Inventory for the same amount. This reflects the decrease in inventory value from its original cost ($5.50 per unit) to its replacement cost ($4.90 per unit) for the 200 units, which is a total loss of $120 (($5.50 - $4.90) * 200).

Panel Install Has 200 Units of Inventory That Have a Replacement