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Recording a Loss in Applying Lower-of-Cost-or-Net Realizable Rule On December 31, Hale Inc. estimated the cost of inventory under the FIFO inventory method to be $100,000 and the net realizable value of inventory to be $95,000. The company did not previously record a holding loss on inventory. a. Prepare the journal entry to record the holding loss on inventory. The company uses an allowance account to reduce inventory and it uses cost of goods sold to adjust equity. b. Prepare the journal entry to record the holding loss on inventory. The company uses an allowance account to reduce inventory and it uses a separate loss account to adjust equity