Glenmore Stores uses a perpetual inventory system and applies IAS 2, measuring inventory item by item at the lower of cost and net realizable value. Write-downs and reversals of write-downs are recorded in Cost of Goods Sold, adjusting the Inventory account directly. At December 31, 2025 its inventory consisted of:
| Item | Cost | Net Realizable Value |
|---|
| Alpine Jackets | 12,000 | 10,500 |
| Trail Boots | 8,000 | 8,600 |
| Summit Tents | 15,000 | 13,200 |
Subsequent events:
- On June 30, 2026, improved demand raised the net realizable value of the Summit Tents (all still on hand) to $14,500. IAS 2 requires a previous write-down to be reversed to the extent of the increase, but never above original cost.
- On September 10, 2026, all of the Alpine Jackets were sold for $11,000 cash.
Instructions:
- Prepare the December 31, 2025 entry to write the inventory down to the lower of cost and net realizable value (item-by-item basis).
- Prepare the June 30, 2026 entry to record the reversal of the write-down on the Summit Tents.
- Prepare the entries on September 10, 2026 to record the sale of the Alpine Jackets and the related cost of goods sold at their carrying amount.