what value would rocky bayou report on the balance sheet at july 31 2012 for invento 559744

Applying the lower of cost or market rule to inventories

Rocky Bayou Golf Clubs, which uses the FIFO method, has the following account balances at July 31, 2012, prior to releasing the financial statements for the year:

Inventory

Cost of goods sold

Sales revenue

Bal

13,500

Bal

68,000

Bal

119,000

Rocky Bayou has determined that the replacement cost (current market value) of the July 31, 2012, ending inventory is $13,000.

Requirements

1. Prepare any adjusting journal entry required from the information given.

2. What value would Rocky Bayou report on the balance sheet at July 31, 2012, for inventory?

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