The current replacement cost of the ending inventory is $3,600. To apply the low

Question

The current replacement cost of the ending inventory is $3,600. To apply the lower of cost or market rule, the journal entry would be

A) debit inventory $1200, credit cost of goods sold $1200 B) debit inventory $1950, credit cost of goods sold $1950 C) debit cost of goods sold $1950, credit inventory $1950 D) debit cost of goods sold $1200, credit inventory $1200

Cypress Co. has the following LIFO perpetual inventory records: Date December 1 December7 December 18 December 31 Purchases $1,500 $1,200 Cost of Goods Sold Inventory on Hand $4,050 $5,550 $4,350 $5,550 $1,200

Explanation / Answer

Answer is D

debit cost of goods sold $1200,

credit inventory $1200

cost of goods sold account would be debited by 1200 and inventory would be reduced by 1200 so inventory account would be credited.

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