Retro Company changed its' inventory method from FIFO to LIFO. Inventory originally reported at $$40,000$ will now be valued at $$35,000.$ How will this change affect the current balance sheet?

Question $30$ options:

Inventory will be $$5,000$ higher and retained earnings will be $$5,000$ higher

Inventory will be $$5,000$ higher and retained earnings will be $$5,000$ lower

Inventory will be $$5,000$ lower and retained earnings will be $$5,000$ higher

Inventory will be $$5,000$ lower and retained earnings will be $$5,000$ lower