Question

Nutritional Foods reports merchandise inventory at the lower-of-cost-or-market. Prior to releasing its financial statements for the year ended March 31, 2017, Nutritionals’ preliminary income statement, before the year-end adjustments, appears as follows:
NUTRITIONAL FOODS
Income Statement (Partial)
Year Ended March 31, 2017
Sales Revenue ........ $ 117,000
Cost of Goods Sold ..... 45,000
Gross Profit ........ $ 72,000
Nutritional has determined that the current replacement cost of ending merchandise inventory is $17,000. Cost is $20,000.
Requirements
1. Journalize the adjusting entry for merchandise inventory, if any is required.
2. Prepare a revised partial income statement to show how Nutritional Foods should report sales, cost of goods sold, and gross profit.


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  • CreatedJune 12, 2015
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