(LIFO or FIFO) results in the highest cost of goods (LIFO or FIFO results in the lowest net income. 3. How are the financial statements affected by using different inventory costing methods? a) When inventory costs are rising. sold. b) When inventory costs are rising 4. How is merchandising inventory valued when using the lower-of-cost-or-market rule? permanent. Write the journal entry to write down the inventory to LCM: Accounts and Explanation a) ABC Company paid $3,000 for its merchandise inventory. At the end of the accounting period, the merchandise inventory can now be replaced for $2.700 and this decline appears to be Date Debit Credit b) LO6. How do we use inventory turnover and days' sales in inventory to evaluate business performance? a) What are the formulas for inventory tunover and days' sales in inventory? Calculate the inventory turnover and days' sales in inventory based on the information below (show work): b) Cost of goods sold Beginning merchandise inventory Ending merchandise inventory $11,000 4,000 3,000