Salem Garden Supplies uses a perpetual inventory system. Salem Garden Supplies has these account balances at July 31, 2016, prior to making the year-end adjustments

A year ago, the replacement cost of ending inventory was $11,200 which exceeded the cost of $10,000. Salem Garden Supplies has determined that the replacement cost of the July 31, 5016, ending inventory of $12,500

Prepare Salem Gardein Supplies 2016 income statement through gross profit to show how the company would apply the lower of cost or market rule to its inventories