Question

econd Street, Inc. has 7 units in ending merchandise inventory on December 31. The units were purchased in November for $180 each. The price lists from suppliers indicate the current replacement cost of the item to be $178 each. Which of the following statements is true of the effects of the adjustments to ending merchandise inventory and the cost of goods sold? Select one: A. The cost of goods sold would not be affected. B. The cost of goods sold would increase by $14. C. The cost of goods sold would decrease by $14. D. The cost of goods sold would increase by $2.

Answer 1

Answer:

A. The cost of goods sold would not be affected

Explanation:

7 units at $180 = 1,260

The difference will be coputed against loss from reducing inventory to NRV not for Cost of good sold as this units weren't sold It do not represent reality to compute an expense for the decreasein value of this units to another units.

Answer 2

Answer:

D

Explanation:

The cost of goods sold would increase by $2