Final answer:
To adjust for a loss in value of inventory using the Direct Method, you debit the inventory account. This adjustment reflects the decrease in the value of inventory on the balance sheet.
Step-by-step explanation:
To adjust for a loss in value of inventory using the Direct Method, you need to account for the decrease in the inventory's value on the balance sheet.
This is done by reducing the inventory value by the amount of the loss. For example, if the inventory has decreased by $500, you would debit the inventory account by $500. This adjustment reflects the decrease in the value of inventory and helps accurately represent the financial position of the business.
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