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Mickey Mouse Company uses lower-of-cost-or-net realizable value to value its inventory. The inventory account is adjusted using an allowance account. Mickey Mouse Company started operations

Mickey Mouse Company uses lower-of-cost-or-net realizable value to value its inventory. The inventory account is adjusted using an allowance account. Mickey Mouse Company started operations on January 1, 2019 and has the following information related to its inventory:

Date Inventory at Cost Inventory at Net Realizable Value
December 31, 2019 $592,000 $451,000
December 31, 2020 $294,000 $233,000

What effect will the above information have on Mickey Mouse Companys net income for 2020?

($218,000)

$80,000

$0

($61,000)

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