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A Company has 500 units in inventory that were purchased for $24 each. These units have a current market value of $30 each. The company's supplier has just announced a price increase to $33 that will go into effect at the beginning of next year. Management should A) make no adjustments to the inventory account B) adjust the inventory account using the lower of the recent market values, which is $30.00 C) adjust the inventory account using the average of the recent market values, which is $33.00 D) adjust the inventory account using the cost, which is $24.00

A Company has 500 units in inventory that were purchased for $24 each. These units have a current market value of $30 each. The company's supplier has just announced a price increase to $33 that will go into effect at the beginning of next year. Management should A) make no adjustments to the inventory account B) adjust the inventory account using the lower of the recent market values, which is $30.00 C) adjust the inventory account using the average of the recent market values, which is $33.00 D) adjust the inventory account using the cost, which is $24.00

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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A Company has 500 units in inventory that were purchased for $24 each. These units have a current market value of $30 each. The company's supplier has just announced a price increase to $33 that will go into effect at the beginning of next year. Management should A) make no adjustments to the inventory account B) adjust the inventory account using the lower of the recent market values, which is $30.00 C) adjust the inventory account using the average of the recent market values, which is $33.00 D) adjust the inventory account using the cost, which is $24.00
Transcribed Image Text:A Company has 500 units in inventory that were purchased for $24 each. These units have a current market value of $30 each. The company's supplier has just announced a price increase to $33 that will go into effect at the beginning of next year. Management should A) make no adjustments to the inventory account B) adjust the inventory account using the lower of the recent market values, which is $30.00 C) adjust the inventory account using the average of the recent market values, which is $33.00 D) adjust the inventory account using the cost, which is $24.00
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