In April of the current year, Mr. Beach, an accrual-basis taxpayer, had a $25,000 theft loss from inventory items held for sale to customers in the ordinary course of his business. In August of the current year, he received a $25,000 reimbursement from his insurance company to cover the loss. Which of the following is a correct method of reporting the loss and reimbursement on Beach's income tax return?

A. Include the $25,000 in ordinary income; the loss is accounted for in the cost of goods sold.

B. Do not report the loss as a separate item; do not include the $25,000 in ordinary income.

C. Include the $25,000 in ordinary income; decrease the cost of goods sold by the $100 casualty loss rule.

D. Apply the 10% adjusted gross income rule to the loss; the amount of the deductible loss would be the amount of the reimbursement to be included in ordinary income.