Exhibit 8-3 The J. Love Company uses a periodic inventory accounting system and values its inventory by using the lower of cost or market rule. The allowance method is used in applying the lower of cost or market rule. The company adjusts and closes its books annually on December 31. Below are the cost and market values of the company's year-end inventories for a three-year period: Date Cost
Market December 31, 2016 $70,000 $70,000 December 31, 2017 56,000 46,000 December 31, 2018 64,000 58,000 ? ? Refer to Exhibit 8-3. Which of the following journal entries would be correct as of December 31, 2017, to apply the lower of cost or market rule to the valuation of inventory?
A) Inventory 46,000Income Summary 46,000
B) Loss Due to Market Valuation 10,000Allowance to Reduce Inventoryto Market 10,000
C) Cost of Goods Sold 10,000Inventory 10,000
D) Cost of Goods Sold 10,000Allowance to Reduce Inventoryto Market 10,000
B
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Indicate whether the statement is true or false