Gordon Garden Supplies uses a perpetual inventory system. Gordon Garden Supplies has these account balances at January 31, 2016, prior to making the year-end adjustments:

A year ago, the current replacement cost of ending inventory was $ 12,000, which exceeded the cost of $ 11,500. Gordon Garden Supplies has determined that the replacement cost of the January 31, 2016, ending inventory is $13,000.
Requirement
1. Prepare Gordon Garden Supplies' 2016 income statement through gross profit to show how the company would apply the lower-of-cost-or-market rule to its inventories.

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Inventory Cost of Goods Sold Sales Revenue Beg ba 11,500 End bal 13,500 Bal 69,000 Bal 118,00