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Nutritional Foods reports merchandise inventory at the lower-of-cost-or-market. Prior to releasing its financial statements for the year ended August 31, 2019, Nutritional's preliminary income statement,
Nutritional Foods reports merchandise inventory at the lower-of-cost-or-market. Prior to releasing its financial statements for the year ended August 31, 2019, Nutritional's preliminary income statement, before the year-end adjustments, appears as follows: (Click the icon to view the preliminary income statement.) Nutritional has determined that the current replacement cost of ending merchandise inventory is $18,000. Cost is $20,000. Read the requirements. Requirement 1. Journalize the adjusting entry for merchandise inventory, if any is required. (Record debits first, then credits. Select the explanation on the last line of the journal entry. For situations that do not require an entry, make sure to select "No entry required" in the first cell in the "Accounts" column and leave all other cells blank.) Date Accounts and Explanation Debit Credit Aug. 31 Requirement 2. Prepare a revised partial income statement to show how Nutritional Foods should report sales, cost of goods sold, and gross profit. Nutritional Foods Income Statement (Partial) Year Ended August 31, 2019 Sales Revenue Cost of Goods Sold Gross Profit Date Accounts and Explanation Debit Credit Aug. 31 Accounts Payable Cash Cost of Goods Sold Merchandise Inventory Requirement 2. Prel Sales Revenue gross profit. Supplies No entry required Is should report sales, cost of gooc Nutritional Foods Income Statement (Partial) Year Ended August 31, 2019 Sales Revenue $ 120,000 Cost of Goods Sold 48,000 $ 72,000 Gross Profit
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