BachInc. has the following LIFO perpetual inventory records:
The current replacement cost of the ending inventory is $2,400. To apply the lower-of-cost-or-market rule, the journal entry would be:
A) Debit Cost of Goods Sold $800, credit Inventory $800
B) debit Inventory $800, credit Cost of Goods Sold $800
C) Debit Cost of Goods Sold $2,000, credit Inventory $2,000
D) debit Inventory $2,000, credit Cost of Goods Sold $2,000
C) Debit Cost of Goods Sold $2,000, credit Inventory $2,000
Explanation: Inventory on hand Dec 31 - replacement cost = adjustment amount; credit Inventory to reduce balance.
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