Handbags Company Had 500 Units of Inventory on Hand at the End

question 172

Multiple Choice

Handbags Company had 500 units of inventory on hand at the end of the year.These were recorded at a cost of $18 each using the last-in,first-out (LIFO) method.The current replacement cost is $15 per unit.The selling price charged by Handbags Company for each finished product is $23.In order to record the adjusting entry needed under the lower-of-cost-or-market rule,the Cost of Goods Sold will be ________.

• A) debited by $7,500
• B) credited by $7,500
• C) debited by $1,500
• D) credited by $1,500

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Definitions:

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