Freshwater Trade Mart has recently had lackluster sales. The rate of inventory turnover has dropped, and the merchandise is gathering dust. At the same time, competition has

forced Freshwater's suppliers to lower the prices that Freshwater will pay when it replaces its inventory. It is now December $31,2024,$ and the net realizable value of Freshwater's

ending inventory is $$70,000$ below what the company actually paid for the goods, which was $$240,000.$ Before any adjustments at the end of the period, the Cost of Goods Sold

account has a balance of $$810,000.$

Read the requirements.

Requirement a$.$ What accounting action should Freshwater take in this situation?

Freshwater should apply the

to account for inventories. The net realizable value of ending inventory is

Freshwater's actual cost, so

Freshwater must write the inventory

to net realizable value.