Lumber Number Ltd What Effect Will This Information Have on the 2003 Statement

question 107

Multiple Choice

Lumber Number Ltd. began business in 2001. It uses a periodic inventory system and values inventory at lower-of-cost-or-market. The following data represents price information related to the inventory on a unit basis: $\begin{array} { | l | l | l | l | l | } \hline & 2002 \text { Inventory } & &{ 2003 \text { Inventory } } \\\hline & \text { Beginning } & \text { Ending } & \text { Beginning } & \text { Ending } \\\hline \text { Cost } & \$ 80 & \$ 86 & \$ 86 & \$ 98 \\\hline \text { Market } 80 & 84 & 84 & 90 \\\hline\end{array}$
What effect will this information have on the 2003 statement of income if the allowance method is used?

• A) $2 holding loss
• B) $4 holding loss
• C) $6 holding loss
• D) $8 holding loss

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