Questions: A company reports merchandise inventory on December 31 at 250,000 but LCM applied to items is 200,000. Record the journal entry to report merchandise inventory at the correct amount: View transaction list Journal entry worksheet 1 A company reports merchandise inventory on December 31 at 250,000 but LCM applied to items is 200,000. Note: Enter debits before credits. Date General Journal Debit Credit December 31

To record the journal entry for adjusting the merchandise inventory to the lower of cost or market (LCM), we need to reduce the inventory value from $250,000 to $200,000. This requires a write-down of $50,000.

The journal entry to record this adjustment is as follows:

\begin{tabular}{|c|l|c|c|} \hline Date & General Journal & Debit & Credit \\ \hline December & & & \\ \hline 31 & Loss on Inventory Write-Down & \$50,000 & \\ \hline 31 & Merchandise Inventory & & \$50,000 \\ \hline \end{tabular}

1. Loss on Inventory Write-Down (Debit $50,000): This account is debited to recognize the loss incurred due to the reduction in the value of the inventory.
2. Merchandise Inventory (Credit $50,000): This account is credited to reduce the inventory value on the balance sheet to its lower market value.

By making this journal entry, the company's financial statements will reflect the inventory at its correct market value of $200,000, and the loss will be recognized in the income statement.