Howard Company Uses the Perpetual Inventory System

Essay

Howard Company uses the perpetual inventory system. The company applies the lower-of-cost-or-market rule to the entire stock of inventory in the aggregate. At the end of the current year, the cost of the inventory was $19,456 and its current market value is $19,950. Indicate how the required adjustment affects the elements of the financial statements. Use the following letters to record your answer in the box shown below. If an event increases one account and decreases another account within the same element, record I/D. If an event has no impact on the element, record NA. You do not need to enter amounts.Increase = IDecrease = DNot Affected = NA