Due to a nationwide recession, PC World’s merchandise inventory is gathering dust. It is now December 31, 2010, and the \($162,000\) that PC World paid for its ending inventory is \($14,000\) higher than current replacement cost. Before any adjustments at the end of the period, PC World’s Cost of Goods Sold account has a balance of \($628,000.\) PC World uses lower of cost or market to value its ending inventory.

Requirements 1. What amount should PC World report for inventory on the balance sheet?

2. What amount should PC World report for cost of goods sold?

3. Journalize any required entries.