Late in December, the next generation of multiuse (MU II) watches is released. In addition to all of the features of the MU watch, the MU II watches are equipped with a global positioning system (GPS) and have the ability to download and play songs and videos off the internet. The demand for the original MU watches is greatly reduced. As of December 31, the estimated market value of MU watches is only $100 per watch.

All watches are sold for $300 each.

Jul.	17	Purchased 50 watches for $7,500 ($150 per watch) on account.
Jul.	31	Sold 40 watches for $12,000 cash.
Aug.	12	Purchased 40 watches for $6,400 ($160 per watch) cash.
Aug.	22	Sold 30 watches for $9,000 on account.
Sep.	19	Paid for watches ordered on July 17.
Sep	27	Received full payment for watches sold on account on August 22.
Oct.	27	Purchased 80 watches for $13,600 ($170 per watch) cash.
Nov.	20	Sold 90 watches for $27,000 cash.
Dec.	4	Purchased 100 watches for $18,000 ($180 per watch) cash.
Dec.	8	Sold 40 watches for $12,000 on account.

I know the MU inventory that's to be reported on 12/31 is $7000. But then what would be theupdated gross profit? And how would I record the adjustments to the market in a journal entry?