It is December 31, end of the year, and the controller of Reed Corporation is applying the lower-of-cost-or-market (LCM) rule to inventories. Before any year-end adjustments Reed reports the following data:
Cost of goods sold........................................... $440,000
Historical cost of ending inventory,
as determined by a physical count ............... 57,000
Reed determines that the replacement cost of ending inventory is $42,000. Show what Reed should report for ending inventory and for cost of goods sold. Identify the financial statement where each item appears.