Can you help explain and show the process, thank you

5. Some of M and T Electronics' merchandise is gathering dust. It is now December 31, 2025, and the current ending merchandise inventory is $125,000. It is determined that the balance in inventory is $30,000 above the current replacement cost. Before the end of period adjustments, the company's Cost of Goods Sold account has a balance of $420,000 (10 points). Requirements: a. Journalize any required entries and post to t-accounts. Merchandise Inventory b. At what amount should the company report merchandise inventory on the balance sheet? c. At what amount should the company report cost of goods sold on the income statement? d. Which accounting principle or concept is most relevant to this situation and why