Dakota Industries Has Two Items in Inventory as of December

Multiple Choice

Dakota Industries has two items in inventory as of December 31, 2015. Each item was purchased for $52. Company management chose to write down Item #1 to $39, which at year-end was assessed to be its market value. Management did not write down Item #2 because its market value was estimated to be greater than $52. During 2016, each item was sold for $63 cash.
If Dakota uses the perpetual inventory method, which of the following would be included in the entry or entries to record the sale of Item #1?

A) A debit to Sales for $63.
B) A credit to Inventory for $52.
C) A debit to Cost of Goods Sold for $39.
D) A credit to Cost of Goods Sold for $52.