A Company Discovered That Inventory That Cost $2 000 and Normally

Multiple Choice

A company discovered that inventory that cost $2 000 and normally sells for $2 400 has become obsolete and will be scrapped next month. The effect of the adjusting journal entry is to:

A) decrease profit by $2 000 and decrease total assets by $2 000.
B) decrease profit by $2 400 and decrease total assets by $2 000.
C) decrease profit by $2 400 and decrease total assets by $2 400.
D) decrease profit by $2 000 and not affect total assets.