Sandra Company had 200 units of inventory on hand at the end of the year. These were recorded at a cost of $12 each using the last-in, first-out (LIFO) method. The current replacement cost is $10 per unit. The selling price charged by Sandra Company for each finished product is $15. In order to record the adjusting entry needed under the lower-of-cost-or-market rule, the Cost of Goods Sold will be:
A. debited by $400.
B. credited by $400.
C. debited by $2,000.
D. debited by $2,000.
Answer: cost = 200* 12 = $2,400
Market value = 200* 10 = $ 2,000
so inventory is recorded at lower of 2400 or 2000 = $ 2,000
so correct option is " A" $ 400
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