A company's current inventory consists of 5,000 units purchased at $6 per unit. Replacement cost has now fallen to $5 per unit. What is the entry the company must record to adjust inventory to market?

A. Debit Cost of Goods Sold $5,000; credit Merchandise Inventory $5,000.
B. Debit Loss on Inventory $5,000; credit Cost of Goods Sold $5,000.
C. Debit Merchandise Inventory $25,000; credit Cost of Goods Sold $25,000.
D. Debit Merchandise Inventory $30,000; credit Cost of Goods Sold $25,000.
E. Debit Cost of Goods Sold $30,000; credit Merchandise Inventory $30,000.


Answer: A

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