Hello, I need some help with the exercise below. Thank you very much, really appreciate it.

P8-32A. Gordon's Drug has been plagued with lackluster sales, and some of the company's merchandise is gathering dust. It is now December 31, 2007. Assume the current replacement cost of Gordon's ending inven- tory is $700,000 below what Gordon paid for the goods, which was $3,900,000. Before any adjustments at the end of the period, assume the Cost of Goods Sold account has a balance of $22,400,000. What action should Gordon take in this situation, if any? Give any journal entry required. At what amount should Gordon report Inventory on the balance sheet? At what amount should the company report Cost of Goods Sold on the income statement? Discuss the accounting principle or concept that is most relevant to this situation