How is merchandising inventory valued when using the lower-of-cost-or-market rule? a)

ABC Company paid $3,000 for its merchandise inventory. At the end of the accounting period, the merchandise inventory can now be replaced for $2,700 and this decline appears to be permanent. Write the journal entry to write down the inventory to LCM:

What are the effects of merchandise inventory errors on the financial statements? Fill in the blanks below with understated or overstated:

a) If the ending merchandise inventory is overstated, then cost of goods sold is _____________, and the net income is _______________.

b) If the ending merchandise inventory is understated, then cost of goods sold is ____________, and the net income is _______________.

How do we use inventory turnover and days sales in inventory to evaluate business performance?

a) What are the formulas for inventory turnover and days sales in inventory?

b) Calculate the inventory turnover and days sales in inventory based on the information below (show work):

Cost of goods sold $11,000

Beginning merchandise inventory 4,000

Ending merchandise inventory 3,000