Full write-off of damaged inventory Steps:

• Cindy included damaged goods at cost of $300 in ending inventory.
• Damaged goods should be excluded from inventory valuation as they are not usable.
• Correction removes the $300 from inventory, reducing it by$300.
• This adjustment records a $300 expense (write-off), reducing profit by$300 and assets/equity by $300.

Why A is correct:

• Accounting standards require writing off damaged inventory to zero if impaired beyond recovery, leading to uniform $300 decreases in inventory, profit, and equity.

Why the others are wrong:

• B: Uses net realizable value adjustment ($300 -$100 = $200), but full write-off applies here.
• C: Wrong direction; correction reduces values, does not increase.
• D: Wrong direction and amount; no basis for $200 increase.

Final answer: A