Assume That the Replacement Did Not Happen in November

question 54

Multiple Choice

Assume that the replacement did not happen in November.In December,the company decided not to replace any of the 1,500 units.The entry required on December 31 to eliminate valuation accounts related to the inventory that will not be replaced will include:

• A)a debit to Excess of Replacement Cost over LIFO Cost of Inventory Liquidation for $22,500.
• B)a credit to Cost of Goods Sold for $15,000.
• C)a debit to Inventory for $70,000.
• D)a debit to Inventory for $15,000.

---

Definitions:

Operating Income

Operating income is the amount of profit realized from a business's core operations, excluding taxes and interest expenses.

Negative Net Cash Flow

A situation where a company's outgoing cash exceeds the incoming cash during a specific period, indicating potential financial trouble.

Financial Statements

Structured reports that detail the financial performance of an organization, typically including the balance sheet, income statement, and cash flow statement.

Depreciation Expenses

The allocation of the cost of tangible assets over their useful lives, recognized as an expense on the income statement.