Your company has 500 units in inventory that had been purchased for $12 each and

Question

Your company has 500 units in inventory that had been purchased for $12 each and that would currently cost $15 to replace. Your supplier has just announced the cost of these goods is rising to $16.5

a. Your company should make no adjustments to the inventory account

b. Your company should adjust the inventory account using the lower of the recent market values, which is $15.

c. Your company should adjust the inventory account using the cost, which is $12.00.

d. Your company should adjust the inventory account using the average of the recent market values, which is $14.50.

a. Your company should make no adjustments to the inventory account

b. Your company should adjust the inventory account using the lower of the recent market values, which is $15.

c. Your company should adjust the inventory account using the cost, which is $12.00.

d. Your company should adjust the inventory account using the average of the recent market values, which is $14.50.

Explanation / Answer

Your company has 500 units in inventory that had been purchased for $12 each and that would currently cost $15 to replace. Your supplier has just announced the cost of these goods is rising to $16.5

answer is

a. Your company should make no adjustments to the inventory account

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