Valley Source Foods reports merchandise inventory at the lower-of-cost-or-market. Prior to releasing its financial statements for the year ended December 31, 2025, Valley Source's preliminary income statemer before the year-end adjustments, appears as follows: (Click the icon to view the preliminary income statement.) Valley Source has determined that the current replacement cost of ending merchandise inventory is $17,000. Cost is $21,000. 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.) Accounts and Explanation Credit Date Dec. 31 Cost of Goods Sold Merchandise Inventory Net Sales Revenue Cost of Goods Sold Gross Profit Debit 116000 53000 4,000 To write merchandise inventory down to market value. Requirement 2. Prepare a revised partial income statement to show how Valley Source Foods should report sales, cost of goods sold, and gross profit. Valley Source Foods Income Statement (Partial) Year Ended December 31, 2025 4,000
Valley Source Foods reports merchandise inventory at the lower-of-cost-or-market. Prior to releasing its financial statements for the year ended December 31, 2025, Valley Source's preliminary income statemer before the year-end adjustments, appears as follows: (Click the icon to view the preliminary income statement.) Valley Source has determined that the current replacement cost of ending merchandise inventory is $17,000. Cost is $21,000. 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.) Accounts and Explanation Credit Date Dec. 31 Cost of Goods Sold Merchandise Inventory Net Sales Revenue Cost of Goods Sold Gross Profit Debit 116000 53000 4,000 To write merchandise inventory down to market value. Requirement 2. Prepare a revised partial income statement to show how Valley Source Foods should report sales, cost of goods sold, and gross profit. Valley Source Foods Income Statement (Partial) Year Ended December 31, 2025 4,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Valley Source Foods reports merchandise inventory at the lower-of-cost-or-market. Prior to releasing its financial statements for the year ended December 31, 2025, Valley Source's preliminary income statement,
before the year-end adjustments, appears as follows:
(Click the icon to view the preliminary income statement.)
Valley Source has determined that the current replacement cost of ending merchandise inventory is $17,000. Cost is $21,000.
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.)
Accounts and Explanation
Debit
Credit
Date
Dec. 31
Cost of Goods Sold
Merchandise Inventory
Net Sales Revenue
Cost of Goods Sold
Gross Profit
C
4,000
116000
53000
To write merchandise inventory down to market value.
Requirement 2. Prepare a revised partial income statement to show how Valley Source Foods should report sales, cost of goods sold, and gross profit.
Valley Source Foods
Income Statement (Partial)
Year Ended December 31, 2025
4,000
Transcribed Image Text:Data table
Valley Source Foods
Income Statement (Partial)
Year Ended December 31, 2025
$
Net Sales Revenue
Cost of Goods Sold
Gross Profit
$
116,000
53,000
63,000
- X
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