Due to a nationwide recession, Computer World, Inc.'s merchandise inventory is gathering dust. It is now October 31, 2016, and the $66,800 that Freeze It Corp., paid for its ending inventory is $2,300 higher than current replacement cost. Before any adjustments at the end of the period, Computer World, Inc.'s Cost of Goods Sold account has a balance of $587,400. Computer World Inc., uses lower of cost or market to value its ending inventory.

Requirements

1. What amount should Computer World Inc., report for inventory on the balance sheet?

2. What amount should Computer World, Inc., report for cost of goods sold?

3. Journalize any required entries.