If, at your year-end, you determine that inventory which originally cost you $20 per item can now only be sold for $25 each instead of the usual selling price of $40 each, what must you do?
a) reduce Inventory and increase Inventory Losses or Cost of Goods Sold by $5 per item
b) return the items to your supplier
c) reduce Inventory by $5 per item but do not record a loss until the items are sold
d) increase Inventory Losses by $5 per item but do not adjust Inventory until the items are sold
e) make no adjustment at all