Dakota Industries Has Two Items in Inventory as of December

question 12

Multiple Choice

Dakota Industries has two items in inventory as of December 31, 2015. Each item was purchased for $52. Company management chose to write down Item #1 to $39, which at year-end was assessed to be its market value. Management did not write down Item #2 because its market value was estimated to be greater than $52. During 2016, each item was sold for $63 cash.
If Dakota uses the perpetual inventory method, which of the following would be included in the entry or entries to record the sale of Item #1?

• A)A debit to Sales for $63.
• B)A credit to Inventory for $52.
• C)A debit to Cost of Goods Sold for $39.
• D)A credit to Cost of Goods Sold for $52.

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Definitions:

Refusing A Request

The action of declining someone's solicitation or petition in a polite or formal manner.

Strategy Development

The process of planning and organizing a series of actions or tactics to achieve a long-term goal or overall objective.

Negative Announcements

Communications that convey unfavorable news, decisions, or changes, often requiring careful wording to minimize negative reactions.

Goodwill

An intangible asset that represents the value of a company's brand name, solid customer base, good customer relations, good employee relations, and any patents or proprietary technology.