Assume That an Entity Acquired 150 Items of Inventory at a Cost

question 1

Multiple Choice

Assume that an entity acquired 150 items of inventory at a cost of $90 each,and sold 100 of the items for $160 each when the replacement cost to the entity was $120 each.Also assume that the replacement cost of the 50 remaining items of inventory at year end was $130.Under the Edwards and Bell approach to current cost accounting,what portion of operating profit would be available for dividends?

• A) $4 000 [100 x ($160 - $120)]
• B) $1 000 [100 x ($130 - $120)]
• C) $3 000 [100 x ($160 - $130)]
• D) $1 500 [50 x ($160 - $130)]

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