Show the journal entry on December for the valuation

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Question - Maze Inc. has held some unique models of watches in stock for almost a year since they purchased those watches on 1 January 2017 at 300,000. At the end of the year 2017, Maze Inc. was evaluating whether they need to write down the value of those inventories. On 31 December 2017, it was estimated that the selling price of those watches was 280,000 and it was estimated that it would cost the Maze Inc. 30,000 to provide free cleaning service to the customers to sell them. Maze Inc. did not sell those watches in 2018. At the end of the year 2018, Maze Inc. estimated that the selling price of those watches would go up to 320,000 due to the increased market demand and no extra cost would be needed to sell them.

Required -

1. Show the journal entry on 31 December 2017 for the valuation of the watches and state how the valuation of these watches affected Maze Inc.'s net income for the year 2017.

2. Show the journal entry on 31 December 2018 for the valuation of the watches and state how the valuation of these watches affected Maze Inc.'s net income for the year 2018.

Reference no: EM132705820

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