19. Gibbs and Reed Partnership owns merchandise that was purchased for $109,000. The merchandise has a current replacement cost of $90,500, and is priced to sell for $127,000. Gibbs and Reed are admitting a new partner, Jay. At what amount should the merchandise be recorded in the accounts of the new partnership if Jay is to be admitted to the partnership?

1. $127,100

2. $109,000

3. $90,500

4. $127,000

5. None of the above.