Tavistock Inc. uses a perpetual inventory system. Tavistock has these account balances at December 31, 2017, 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 31, 2017, ending inventory is $12,000.

Requirement

Prepare Tavistock Inc.'s 2017 income statement through gross profit to show how the company would apply the lower-of-cost-and-net-realizable-value rule to its inventories?