Tavistuck Inc. uses a perpectual inventory system. Tavistock has these account balances at December 31, 2020, prior to making the year-end adjustments:

A year ago, the net realizable value of Tavistock's ending inventory was \(\$ 13,000\), which exceeded cost of \(\$ 12,400\). Tavistock has determined that the net realizable value of the December 3î́, 2020 , ending inventory is \(\$ 12,000\).
{Requirement}
Prepare Tavistock Inc.'s 2020 income statement through gross profit to show how the company would apply the lower-of-cost-and-net-realizable-value rule to its inventories.

Transcribed Image Text:

Beg. bal. End bal. Inventory 12,400 Cost of Goods Sold Sales Revenue 14,000 | Bal. 78,000 Bal. 125,000