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Shipman, Inc. has 7 units in inventory on December 31. The units were purchased in November for $190 ...

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Shipman, Inc. has 7 units in inventory on December 31. The units were purchased in November for $190 ...

Shipman, Inc. has 7 units in inventory on December 31. The units were purchased in November for $190 each. The price lists from suppliers indicate the current replacement cost of the item to be $186 each. What is the effect on gross profit if Shipman values its ending merchandise inventory using the lower-of-cost-or-market rule?
A) The gross profit would not be affected.
B) The gross profit would increase by $4.
C) The gross profit would increase by $28.
D) The gross profit would decrease by $28.

Textbook

Horngren's Financial & Managerial Accounting, The Financial Chapters

Edition: 5^th

Authors: Miller-Nobles, Mattison, Matsumura

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H3Ko Author

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7 years ago

Really appreciate your help. Sorry for taking so long to thank you, you deserve the recognition.

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