Washington Distribution Co

question 114

Multiple Choice

Washington Distribution Co.has determined its December 31, 2017 inventory on a FIFO basis at $240,000.Information pertaining to that inventory follows: Washington records losses that result from applying the lower of cost and net realizable value rule.At December 31, 2017, the loss that Washington should recognize is

• A)$0.
• B)$5,000.
• C)$15,000.
• D)$25,000.

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Definitions:

Fee

A charge for services provided or the right to participate in an activity or access certain benefits.

Unearned Rent Revenue

Liability account that reflects payments received for rent before the rental period has occurred; it is recognized as revenue over time as the service is provided.

Rent Expense

The cost incurred by a business to utilize property as an office, manufacturing space, storage, or retail location.

Prepaid Rent Expense

An asset account that shows the amount of rent paid in advance, which has not yet been consumed or used.