E6-21 Applying the lower-of-cost-or-market rule to merchandise inventories Clarmont Resources, which uses the FIFO inventory costing method, has the following account balances at May 31, 2019, prior to releasing the financial statements for the year: Merchandise Inventory, ending Cost of Goods Sold Net Sales Revenue 13,500 68,000 123,000 Clarmont has determined that the current replacement cost (current market value) of the May 31, 2019, ending merchandise inventory is $12,400. Requirements 1. Prepare any adjusting journal entry required from the information given. 2. What value would Clarmont report on the balance sheet at May 31, 2019, for mer- chandise inventory