On June 15, 2017, Wynne Corporation accepted the delivery of merchandise which was purchased on account. As of June 30, Wynne had not recorded the transaction or included the merchandise in its inventory. The effect of this on its balance sheet for June 30, 2017, would be assets and stockholders' equity were overstated but liabilities were not affected. stockholders' equity was the only item affected by the omission. assets, liabilities, and stockholders' equity were understated. assets and liabilities were understated but stockholders' equity was not affected. QUESTION 33 Why are inventories stated at lower-of-cost or net realizable value? To report a loss when there is a decrease in future utility. To keep track of the market value of the inventory. To report a loss when there is a decrease in the future utility below the original cost. To permit future profits to be recognized. QUESTION 34 Ryan Distribution Co. has determined its December 31, 2017 inventory on a FIFO basis at $980,000. Information pertaining to that inventory follows: Estimated selling price Estimated cost of disposal Normal profit margin Current replacement cost $1,020,000 40,000 120,000 900,000 Ryan records losses that result from applying the lower-of-cost-or-market rule. On December 31, 2017, the loss that Ryan should recognize is $0. $20,000. $40,000. $80,000