I need help with accounting question ?

Question

It’s the end of the year and Credit Company is applying the lower-of-cost-or-market (LCM) rule to inventory. The company has obtained the following information before any year-end adjustments:

Cost of goods sold, $500,000

Historical cost of ending inventory, $120,000

Replacement cost of ending inventory, $105,000

Journalize any required entry. Indicate what the company will report for ending inventory and cost of goods sold and the financial statements where these accounts will appear.

Answer 1

Journal entry:

Dr  COGS $15,000

Cr  Ending inventory $15,000

What will be reported:

Cost of goods sold, $515,000 in income statement

ending inventory, $105,000 in balance sheet