One Hundred Units of Inventory on Hand at the End

question 110

Multiple Choice

One hundred units of inventory on hand at the end of the year are recorded at their cost of $10 each using LIFO.Current replacement cost is $8.00.How would the Gross profit be affected by the adjusting entry needed under lower-of-cost-or-market?

• A) Gross profit would not be affected.
• B) Gross profit would go down by $80.
• C) Gross profit would go up by $200.
• D) Gross profit would go down by $200.

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