Cammy Company Had Inventory at the End of the First

question 25

Multiple Choice

Cammy Company had inventory at the end of the first quarter having a cost of $420,000 and a market value of $410,000.Cammy recognized a $10,000 loss in its first quarter financial statements due to market declines.At the end of the second quarter, the inventory had a cost of $450,000, and a market value of $480,000.Cammy's action in the second quarter should be:

• A)​nothing.
• B)​recognize a $30,000 gain due to market recoveries.
• C)​recognize a $10,000 gain due to market recoveries.
• D)​recognize a recovery based on the first quarter write-down multiplied by the gross profit percentage.

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Definitions:

Quantity Supplied

the amount of a good or service that producers are willing and able to sell at a given price over a specific period.

Quantity Demanded

The aggregate sum of a product or service that buyers are prepared to buy at a determined price point, at a certain moment.

Surplus

The situation in which the quantity of goods produced exceeds the quantity demanded, often leading to a drop in prices.

Supply Increases

Refers to a situation where the quantity of a good or service that producers are willing and able to sell at a given price level rises, often leading to a decrease in prices if demand remains constant.