A pet food manufacturer has 4,000,000 of inventory recorded at historical cost after applying lower of cost and net realizable value the company will have an inventory write down of 24,000. The company uses the loss method of reporting this adjustment. Which entry will the company make to account for the decrease in inventory value?

1. Debit loss on inventory 240,000, credit inventory 240,000

2. Credit loss on inventory 240,000, credit inventory 240,000

3. Debit cost of goods sold (COGS), 240,000, credit inventory 240,000

4. Credit cost of goods sold (COGS) 240,000, debit inventory 240,000.