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Hot Pepper Company had the following information in its accounting records at year end: Inventory Cost $4,000,000 It estimates the net realizable value of this inventory is $3,500,000. As a result of this information Hot Pepper Co. would: Make a journal entry debiting a loss on inventory decline for $500,000 Make a journal entry debiting the allowance for inventory valuation for $500,000 Make a journal entry crediting the allowance for inventory valuation for $500,000 Make a journal entry debiting a gain on market appreciation for $500,000 Make no entry

Hot Pepper Company had the following information in its accounting records at year end: Inventory Cost $4,000,000 It estimates the net realizable value of this inventory is $3,500,000. As a result of this information Hot Pepper Co. would: Make a journal entry debiting a loss on inventory decline for $500,000 Make a journal entry debiting the allowance for inventory valuation for $500,000 Make a journal entry crediting the allowance for inventory valuation for $500,000 Make a journal entry debiting a gain on market appreciation for $500,000 Make no entry

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Hot Pepper Company had the following information in its accounting records at year end:

Inventory Cost $4,000,000

It estimates the net realizable value of this inventory is $3,500,000. As a result of this information Hot Pepper Co. would:

Make a journal entry debiting a loss on inventory decline for $500,000

Make a journal entry debiting the allowance for inventory valuation for $500,000

Make a journal entry crediting the allowance for inventory valuation for $500,000

Make a journal entry debiting a gain on market appreciation for $500,000

Make no entry

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