Princeton Garden Supplies uses a perpetual inventory system. Princeton Garden Supplies has these account balances at October 31, 2012, prior to making the year-end adjustments:

A year ago, the replacement cost of ending inventory was $13,500, which exceeded cost of $13,000. Princeton Garden Supplies has determined that the replacement cost of the October 31,
2012, ending inventory is $12,500.

Requirement
Prepare Princeton Garden Supplies€™ 2012 income statement through gross profit to show how the company would apply the lower-of-cost-or-market rule to itsinventories.

Transcribed Image Text:

Inventory Cost of Goods Sold Sales Revenue Beg bal 13,000 End bal 14,000 Bal 70,000 Bal 115,000