Applying the lower-of cost-or-market rule to inventories

Naturally Good Foods reports merchandise inventory at the lower of cost or market. Prior to releasing its financial statements for the year ended March 31, 2015, Naturallys preliminary income statement, before the year-end adjustments, appears as follows:

Naturally Good Food

Income Statement (Partial)

Year Ended March 31, 2015

Sales revenue	$117,00
Cost of good	45,000
Gross profit	$72,000