Consider the following:

• March 15 current year: Linsay bought 80 bags of mulch for $640.00 =640/80
• April 20 current year: Linsay bought 75 bags of mulch for $618.75
• June 12 current year: Linsay sold 125 bags of mulch to Woody's Weeds
• June 15 current year: Linsay created a new inventory item named birdbath

When creating the item, a beginning quantity of 25 and a cost value of $23.82 per unit was mistakenly entered.

What is the effect on the General Ledger when Linsay saves the new birdbath item?

• Debit Inventory for $23.82, credit Opening Balance Equity for $23.82.

• Debit Inventory Asset for $23.82, credit Inventory Shortage for $23.82

• Debit Opening Balance Equity for $595.50, credit Inventory for $595.50

• Debit Inventory for $595.50, credit Opening Balance Equity for $595.50

• Debit Inventory Shortage for $595.50, credit Opening Balance Equity for $595.50

This is the entire question on the exam

Thanks,

Jan