Teel Distribution Co Teel Records Losses That Result from Applying the Lower-Of-Cost-Or-Market Rule

question 79

Multiple Choice

Teel Distribution Co.has determined its December 31, 2007 inventory on a FIFO basis at $250,000.Information pertaining to that inventory follows: $$\begin{array} { l r } \text { Estimated selling price } & \$ 255,000 \\\text { Estimated cost of disposal } & 10,000 \\\text { Normal profit margin } & 30,000 \\\text { Current replacement cost } & 225,000\end{array}$$ Teel records losses that result from applying the lower-of-cost-or-market rule.At December 31, 2007, the loss that Teel should recognize is

• A)$0.
• B)$5,000.
• C)$20,000.
• D)$25,000.

---

Definitions:

Check Register

A personal record book or a digital log used to track checks written, deposits made, and current balance of a checking account.

Bank Statement

A document or electronic file provided by a bank summarizing transactions in an account over a certain period.

Outstanding Deposit

Refers to funds that have been deposited in a bank account but have not yet been credited or made available for use.

Outstanding Checks

Checks that have been written and recorded in the account ledger but have not yet been cashed or cleared by the bank.