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Pat and Company's ending inventory (at cost) was $87,500. The company would have had to pay $100,000 to replace the ending inventory. Before consideration of

Pat and Company's ending inventory (at cost) was $87,500. The company would have had to pay $100,000 to replace the ending inventory. Before consideration of the lower-of-cost-or-market rule, the company's cost of goods sold was $60,000. Which of the following statements reflect the correct application of the LCM rule?

  • The Ending Inventory balance will be $100,000, and Cost of Goods Sold will be $72,500.
  • The Ending Inventory balance will be $87,500, and Cost of Goods Sold will be $60,000.
  • The Ending Inventory balance will be $87,500, and Cost of Goods Sold will be $72,500.
  • Ending Inventory balance will be $100,000, and Cost of Goods Sold will be $72,500.

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