Inventory write down journal entry is an accounting term that refers to an entry in a company’s books reflecting a periodic reduction of the value of its inventories. This process is necessary when the items held in inventory become obsolete or otherwise lose their original value due to changes in market conditions. The journal entry will reduce the cost of goods sold as well as the amount of inventory reported on the company’s balance sheet. Ultimately, this ensures that investors and creditors have an accurate picture of a company’s financial position.