At the end of the 2016 accounting period DeYoung Company determined that the market value of its inventory was $79,800.The historical cost of this inventory was $81,400.DeFazio uses the perpetual inventory method.The entry necessary to reduce the inventory to the lower of cost or market will

Question

Quizplus · Accepted Answer

The entry required to reduce the inventory to the lower of cost or market involves debiting Cost of Goods Sold (decreasing gross margin and net income) and crediting Inventory (decreasing assets). Therefore, the correct choice is D, which states that assets, gross margin, and net income will all decrease.

At the End of the 2016 Accounting Period DeYoung Company