Recording a Loss in Applying Lower$-$of$-$Cost$-$or$-$Net Realizable Value

On December $31,$ Vale Inc. estimated the cost of inventory under the average cost method to be $$264,000$ and the net realizable value of inventory to be

$$255,000.$ The company has not previously recorded a holding loss on inventory.

a$.$ Prepare the journal entry to record the holding loss on inventory using an allowance account to reduce inventory and cost of goods sold to adjust

expense.

$b.$ Prepare the journal entry to record the holding loss on inventory using an allowance account to reduce inventory and a separate loss account to adjust

equity.