Negredo Medical Supplies uses LIFO cost flow assumption and has developed the following data for its products: Surgical Equipment Surgical Supplies Number of units in inventory Per unit: 400 370 205 345 255 Selling Price Cost 175 Replacement cost 325 64 30% 165 Cost to sell 22 Normal gross profit ratio 35% Normal gross profit ratio is expressed as a percentage of selling price. Negredo adjusts an allowance account at year-end to record net realizable value adjustments to its inventory. All products are reported at cost at the beginning of the year. The entry at year-end will: Multiple Choice reduce equity by $3,700 increase liabilities by $3,700 reduce assets by $31,000 reduce equity by $31,000