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Wire SolutionsCompany's income statement for the month ended August31, 2020, reported the followingdata: Income Statement: Sales Rev. 420 000 COGS: Beginning Inventory 94 000 Net
Wire SolutionsCompany's income statement for the month ended August31, 2020, reported the followingdata:
Income Statement:
Sales Rev. 420 000
COGS:
Beginning Inventory 94 000
Net Purchases 243 700
COGS available for sale 337 700
Less: Ending Inventory 113 000
COGS 224 700
Gross Margin 195 300
Before the financial statements werereleased, it was discovered that the current net realizable value of ending inventory was $105,000.
Required.
- Journalize the entry to apply thelower-of-cost-and-net-realizable-value rule to the inventory.
- Prepare a revised income statement to adjust the preceding income statement to apply thelower-of-cost-and-net-realizable-value rule to Wire SolutionsCompany's inventory.
- What is the inventory balance that would be reported on the Wire SolutionsCompany's balancesheet? How would it bereported?
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