Question

In: Accounting

Your company has 100 units in inventory, purchased at $16 per unit, and this inventory could...

Your company has 100 units in inventory, purchased at $16 per unit, and this inventory could be replaced at $14 per unit.

Multiple Choice

The company should debit revenue for $200 and credit inventory for $200.

The company should debit loss in inventory value for $200 and credit inventory for $200.

The company should debit inventory for $200 and credit cash for $200.

The company should debit inventory for $200 and credit cost of goods sold for $200.

Solutions

Expert Solution

Decline in value of inventory = 100*(16-14) = $200
The company should debit loss in inventory value for $200 and credit inventory for $200.
Option B is correct

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