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Given the following information for the Network Company: Date Cost Market December 31, 2004 $ 800 $ 800 December 31, 2005 1,000 940 December 31,
Given the following information for the Network Company:
| Date | Cost | Market |
| December 31, 2004 | $ 800 | $ 800 |
| December 31, 2005 | 1,000 | 940 |
| December 31, 2006 | 1,100 | 1,060 |
If the allowance method of recording lower of cost or market is in use, which December 31, 2006 entry is not correct?
| a. | Loss Due to Market Valuation 40 Allowance to Reduce Inventory to Market 40 |
| b. | Allowance to Reduce Inventory to Market 20 Loss Recovery Due to Market Valuation 20 |
| c. | Inventory 1,100 Income Summary 1,100 |
| d. | Income Summary 1,000 Inventory 1,000 |
Please explain the answer. Thank you.
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