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.