Some of M and C Electronics's merchandise is gathering dust. It is now December 31, 2016, and the current replacement cost of the ending merchandise inventory is $30,000 below the business's cost of the goods, which was $95,000. Before any adjustments at the end of the period, the company's Cost of Goods Sold account has a balance of $370,000 Requirements 1. Journalize any required entries. 2. At what amount should the company report merchandise inventory on the balance sheet? 3. At what amount should the company report cost of goods sold on the income statement? 4. Which accounting principle or concept is most relevant to this situation? Requirement 1. Journalize any required entries (Record debits first, then credits. Select the explanation on the last line of the journal entry table. For situations that do not require an entry, make sure to select "No Entry Required in the first cell in the "Accounts" column and leave all other cells blank.) The required journal entry would be: Date Accounts and Explanation Debit Credit Dec. 31 Date Accounts and Explanation Debit Dec. 31 No Entry Required Cost of Goods Sold Merchandise Inventory Other Expense Requirement 2 Purchase Discounts Sales Revenue M and C shoulcs Supplies antory on the balanc Accounts and Explanation Debit tory on the be rement 2 To write merchandise inventory down to market value. C should to write merchandise inventory down to original cost. To write up merchandise inventory to market value. e from al To write up merchandise inventory to original cost. Tue to the ne Requirement 2. At what amount should the company report merchandise inventory on the balance sheet? M and C should report merchandise inventory on the balance sheet at $ Requirement 3. At what amount should the company report cost of goods sold on the income statement? M and C should report cost of goods sold on the income statement at $ Requirement 4. Which accounting principle or concept is most relevant to this situation? is the reason to account for merchandise inventory at directs accountants to decrease the accounting value of an asset if it appears unrealistically high. *RAN BARUULIVU C ally IPUINCILIKITUISC Hvery Uller inventory on the balance sheet at $ | Tould the company report cost of goods sold on the incom Conservatism The consistency principle ple The disclosure principle The materiality concept sold on the income statement at $ principle or concept is most relevant to this situation? is the reason to account for merchandise inventory at directs accountants to decrease the accountin asset if it appears unrealistically high. Mand C should report merchandise inventory on the balance sheet at $ average cost buld the company report cost of goods sold on the income FIFO cost sold on the income statement at $ LIFO cost rinciple or concept is most relevant to this situation? the lower of cost or market ason to account for merchandise inventory at directs accountants to decrease the accounting asset if it appears unrealistically high. Wan Should report mellid Seven H ardlice Sreel al 3 Requirement 3. At what amou Conservatism report cost of goods sold on the income stateme M and C should report cost of Consistency ne statement at $ Requirement 4. Which accour Disclosure Dt is most relevant to this situation? Materiality or merchandise inventory at directs accountants to decrease the accounting value of asset if it appears unrealistically high