Returned Inventory The company sells large industrial equipment. A piece of equipment with an…

Returned Inventory

The company sells large industrial equipment. A piece of equipment with an original cost of $100,000 and an original selling price of $150,000 was recently returned. It is expected that the equipment will be able to be resold for just $85,000. The company normally earns a gross profit of 33.33% of the selling price. How much loss is recorded when the inventory is returned and how much gross profit will be reported when the equipment is resold assuming that the returned inventory is recorded at (1) its original cost, (2) its net realizable value, and (3) its net realizable value minus a normal gross profit?

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