A Company Discovered That Inventory That Cost $1000 and Normally

Multiple Choice

A company discovered that inventory that cost $1000 and normally sells for $1200 has become obsolete and will be scrapped next month.The effect of the adjusting journal entry is to:

A) decrease profit by $1000 and decrease total assets by $1000.
B) decrease profit by $1200 and decrease total assets by $1000.
C) decrease profit by $1200 and decrease total assets by $1200.
D) decrease profit by $1000 and not affect total assets.