A retail company has inventory that cost $30 per unit. The retail price has historically been $40, however; due to a decrease in demand, the price has dropped and now the expected selling price is $32 per unit. The retailer pays $5 in direct costs to sell each product. At the end of the year, the company has 4,000 units in ending inventory. Required: Prepare the journal entry at year end.

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A: Required journal entries are shown below: