A company has 700,000 of inventory at historical cost after applying lower of cost and net realizable value the company will have an inventory write down of 90,000. The company uses the cost of goods sold method of reporting this adjustment. Which entry will the company make to account for the decrease in inventory value?

1. Debit cost of goods (COGS) 90,000, credit inventory 90,000

2. Credit cost of goods sold (COGS) 90,000, debit inventory 90,000

3. Debit loss on inventory 90,000, credit inventory 90,000

4. Credit loss on inventory 90,000, credit inventory 90,000