Question

​Kim's Retail had 800 units of inventory on hand at the end of the year. These were recorded at a cost of​ $15 each using the lastminus​in, firstminusout ​(LIFO) method. The current replacement cost is​ $11 per unit. The selling price charged by​ Kim's Retail for each finished product is​ $18. In order to record the adjusting entry needed under the lowerminusofminuscostminusorminusmarket ​rule, the Merchandise Inventory will be​ ________.

A. credited by $11,200
B. debited by $11.200
C. debited by $1,600
D. credited by $1.600

Answer 1

D. credited by $1.600

Step-by-step explanation:

Market value lowering = ($11 - $15)*800/2 units = $1,600

Therefore, The Merchandise Inventory will be credited by $1,600.