At the end of the Year 2 accounting period, DeYoung Company determined that the market value of its inventory was $79,800. The historical cost of this inventory was $81,400. DeFazio uses the perpetual inventory method. Assuming the amount is material, how will the entry necessary to reduce the inventory to the lower of cost or market affect the elements of the companys financial statements?

Decrease total assets and gross margin

Decrease total assets and net income

Increase total assets and net income

Decrease total assets, gross margin, and net income