[The Following Information Applies to the Questions Displayed Below

question 37

Multiple Choice

[The following information applies to the questions displayed below.]
At year-end,the perpetual inventory records of Anderson Co.indicate 60 units of a particular product in inventory,acquired at the following dates and unit costs:
Purchased in August: 30 units at $750 per unit.
Purchased in November: 30 units at $700 per unit.
A complete physical inventory taken at year-end indicates only 50 units of this product actually are on hand
-Assuming that Anderson uses the LIFO cost flow assumption,it should record this inventory shrinkage by:

• A)Debiting Cost of Goods Sold $7,000.
• B)Crediting Cost of Goods Sold $7,500.
• C)Debiting Cost of Goods Sold $7,500.
• D)Crediting Cost of Goods Sold $7,000.

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Definitions:

Depreciable Asset

An asset subject to depreciation, which means its cost is allocated over its useful life due to wear and tear, deterioration, or obsolescence.

Carrying Amount

The net value of an asset or liability as presented on the balance sheet, accounting for factors like depreciation or amortization where applicable.

Accrual Basis

Accrual Basis is an accounting method that records revenues and expenses when they are earned or incurred, regardless of when cash is received or paid.