ABC LLC manufactures and sells paper envelopes.
The stock of envelopes was included in the closing inventory as of December 31, 2005, at a cost of $50 each per pack. During the final audit, the auditors noted that the subsequent sale price for the inventory at January 15, 2006, was $40 each per pack. Furthermore, inquiry reveals that during the physical stock take, a water leakage has created damages to the paper and the glue. Accordingly, in the following week, ABC LLC spent a total of $15 per pack for repairing and reapplying glue to the envelopes. The net realizable value and inventory write down (loss) amount to
(a) $40 and $10 respectively.
(b) $45 and $10 respectively.
(c) $25 and $25 respectively.
(d) $35 and $25 respectively.
(e) $30 and $15 respectively.23