At the End of Its First Year of Business,Payless,Inc

Essay

At the end of its first year of business,Payless,Inc.had Sales of $800,000 and Cost of goods sold of $500,000 prior to a lower-of-cost-or-market write down.Payless reported its inventory at the lower market value of $90,000 instead of the cost of $100,000.The adjusting entry to record the write down included a decrease to Inventory and Cost of goods sold.
Required: Put an X in the appropriate box to show the effect of lower-of-cost-or-market write down: