Huron Garden Supplies uses a perpetual inventory system. The company has these account balances at October 31, 2018, prior to making the year-end adjustments:

A year ago, the net realizable value of ending inventory was $12,800, which exceeded the cost of $10,500. Huron has determined that the net realizable value of the October 31, 2018, ending inventory is $11,000.

Requirement

1. Prepare the company’s 2018 income statement through gross profit to show how the company would apply the lower-of-cost-or-market rule to its inventories.

Transcribed Image Text:

Inventory Beg bal 10,500 End bal 15,500 Cost of Goods Sold Sales Revenue Bal 73,000 119,000 Bal