Better Buy Inc

question 108

Multiple Choice

Better Buy Inc.has six CD players in inventory on December 31.The players were purchased in November for $170.The price lists from suppliers indicate the current replacement cost of a CD player to be $168.What is the effect on gross profit if Better Buy values its ending merchandise inventory using the lower-of-cost-or-market rule?

• A)The gross profit would increase by $2.
• B)The gross profit would not be affected.
• C)The gross profit would decrease by $12.
• D)The gross profit would increase by $12.

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