Intermediate Accounting 105 Please help with the (b) section of this problem. Thank you **Journal Entries for Inventory Adjustment to NRV**In this exercise, we will prepare the necessary journal entries as of December 31, 2026, and December 31, 2027, assuming a perpetual inventory system is used. The inventory is recorded at cost and then reduced to the lower of cost or net realizable value (LCNRV) using the loss method.**Instructions:**- List all debit entries before credit entries.- Credit account titles are automatically indented when the amount is entered. - Do not indent manually.- If no entry is required, select "No entry" for the account titles and enter 0 for the amounts.- Record journal entries in the order presented in the problem.**Journal Entries:**| Date | Account Titles and Explanation | Debit | Credit ||------------|---------------------------------------------|--------|--------|| 12/31/26 | Allowance to Reduce Inventory to NRV | 71,400 | || | Inventory | | 714 || 12/31/27 | Allowance to Reduce Inventory to NRV | 77,800 | || | Inventory | | 778 |These entries adjust the inventory value to reflect any declines to their net realizable value, ensuring accurate financial reporting. Pronghorn Company determined its ending inventory at cost and at LCNRV at December 31, 2025, December 31, 2026, and December 31, 2027, as shown below.| Date | Cost | NRV ||------------|----------|----------|| 12/31/25 | $691,400 | $691,400 || 12/31/26 | $755,300 | $683,900 || 12/31/27 | $954,100 | $876,300 |In this table, "Cost" refers to the original purchase cost of the inventory. "NRV" (Net Realizable Value) is the estimated selling price in the ordinary course of business, minus reasonably predictable costs of completion, disposal, and transportation.### Analysis:- **2025:** The cost and NRV are equal, indicating no reduction in value.- **2026:** The NRV is lower than the cost, suggesting a potential write-down of inventory is needed.- **2027:** Similar to 2026, the NRV is lower than the cost, indicating a continued depreciation in the value of inventory.

Name: Intermediate Accounting 105 Please help with the (b) section of this p
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Description: Intermediate Accounting 105 Please help with the (b) section of this problem. Thank you **Journal Entries for Inventory Adjustment to NRV**In this exercise, we will prepare the necessary journal entries as of December 31, 2026, and December 31, 2027,

Net Realizable Value (NRV) is a term used in accounting to refer to the estimated selling price of…

Business

Accounting

Pronghorn Company determined its ending inventory at cost and at LCNRV at December 31, 2025, December 31, 2026, and December 31, 2027, as shown below. 12/31/26 Cost 12/31/25 $691,400 $691,400 12/31/27 755,300 NRV 954,100 683,900 876,300

Pronghorn Company determined its ending inventory at cost and at LCNRV at December 31, 2025, December 31, 2026, and December 31, 2027, as shown below. 12/31/26 Cost 12/31/25 $691,400 $691,400 12/31/27 755,300 NRV 954,100 683,900 876,300

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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