question1:- Which of the following accounts is debited when writing down the inventory from its cost to its net realizable value, assuming the amount of loss is material?

a. Inventory

b. Gain due to decline of inventory from cost to net realizable value

c. Cost of Goods Sold

d. Loss due to decline of inventory from cost to net realizable value

e. None of the above.

Question 2: Ryan Distribution Co. has determined its December 31, 2020 inventory on a FIFO basis at $490,000. Information pertaining to that inventory follows: Estimated selling price $510,000 Estimated cost of disposal 30,000 Normal profit margin 60,000 Current replacement cost 450,000.Ryan includes unrealized losses that result from applying the lower-of-cost-or- net realizable value in the cost of goods sold account. At December 31, 2020, the loss that Ryan should recognize is

a. $0.

b. $10,000.

c. $20,000.

d. $40,000.

e. None of the above.

Question 3:Data related to the inventories of Alpine Ski Equipment and Supplies is presented below: Skis Boots Apparel Supplies Selling price $ 180,000 $ 140,000 $ 120,000 $ 60,000 Cost 128,000 133,000 90,000 45,000 Replacement cost 120,000 130,000 110,000 41,000 Sales commission 10% 10% 10% 10% In applying the lower of cost or net realizable value rule, the inventory of supplies would be valued at:

A) $45,000.

B ) $54,000.

C) $41,000.

D) $60,000.

E) None of the above.

Question 3: Under GAAP, sales tax paid on new equipment acquired for use in the business is to be expensed.

True or False