E6-34B. (Learning Objective 3: Applying the net realizable value to inventories) Secret Garden Supplies uses a perpetual inventory system. Secret Garden Supplies has these account balances at May 31, 20X6, prior to making the year-end adjustments:

A year ago, the NRV cost of ending inventory was €14,600, which exceeded the cost of €12,500. Secret Garden Supplies has determined that the NRV cost of the May 31, 20X6, ending inventory is €13,400.
Requirement 1. Prepare Secret Garden Supplies’ 20X6 Income Statement through gross profit to show how the company would apply the net realizable value to its inventories.

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Inventory Beg. bal. 12,500 End. bal. 15,300 Cost of Goods Sold Sales Revenue Bal. 63,000 Bal. 152,000