Nature FoodsNature Foods reports merchandise inventory at the lower-of-cost-or-market. Prior to releasing its financial statements for the year ended May 31, 2019. Nature has determined that the current replacement cost of ending merchandise inventory is $20,000. Cost is $21,000.

preliminary income statement, before the year-end adjustments, appears as follows

if st li Nature Foods Income Statement (Partial) Year Ended May 31, 2019 Sales Revenue Cost of Goods Sold Gross Profit $ 121,000 51,000 $ 70,000