Due to a nationwide recession, Freeze It Corp.’s merchandise inventory is gathering dust. It is now July 31, 2012, and the $160,500 that Freeze It Corp., paid for its ending inventory is $11,200 higher than current replacement cost. Before any adjustments at the end of the period, Freeze It Corp.’s Cost of Goods Sold account has a balance of $671,000. Freeze It Corp. uses lower of cost or market to value its ending inventory.

Requirements
1. What amount should Freeze It Corp., report for inventory on the balance sheet?
2. What amount should Freeze It Corp., report for cost of goods sold?
3. Journalize any required entries.