Zahler Company uses a periodic inventory system and the average cost method. At
December 31, 2025, the following information has been compiled for its finished
goods inventory:
Replacement value $13,000
Cost $14,500
Expected selling price $15,000
Normal profit margin 15%
Selling costs 5% of expected selling price
After applying LCNRV, Zahler, which uses the cost of goods sold method to
record inventory write-downs, will make an entry
debiting Cost of Goods Sold for $250.
crediting Inventory for $500.
crediting Cost of Goods Sold for $1,500.
debiting Inventory Loss for $500.