Paulson, Inc. has 5 computers which have been part of the inventory for over two years. Each computer cost $600 and originally retailed for $825. At the statement date, each computer has a current replacement cost of $350. How much loss should Paulson, Inc., record for the year?
A) $1,125.
B) $1,250.
C) $1,500.
D) $1,750.

Question

Quizplus · Accepted Answer

To calculate the loss, we need to compare the original cost of the computers with their current replacement cost.

Original cost of each computer = $600 
Current replacement cost of each computer = $350

Loss per computer = $600 - $350 = $250

Total loss for 5 computers = $250 x 5 = $1,250

Therefore, the answer is B.