What will be the journal entry using the allowance method

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Problem 1: XY company purchased 80 units product TI-89 for $69 each and sold them for $85 each. The disposal cost of each unit is $30, and the replacement cost is $60. If the manager of XY company thought that the product TI-89 had lost value, what will be the journal entry using the Allowance method? Please explain detail how to do it

Option 1:
Credit to Allowance to Reduce Inventory $1120 (Correct Ans)

Option 2:
Debit to COGS $1120

Option 3:
Credit to Loss Due to Market Decline of Inventory $1280

Option 4:
Debit to Allowance to Reduce Inventory $1280

Reference no: EM132727735

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