Drew Co. uses the average cost inventory method for internal reporting purposes and LIFO for financial statement and income tax reporting. At December 31, 2011, the inventory was $375,000 using average cost and $320,000 using LIFO. The unadjusted credit balance in the LIFO Reserve account on December 31, 2011, was $35,000. What adjusting entry should Drew record to adjust from average cost to LIFO at December 31, 2011?

Debit Credit

a. Cost of goods sold $55,000 Inventory $55,000

b. Cost of goods sold $55,000 LIFO reserve $55,000

c. Cost of goods sold $20,000 Inventory $20,000

d. Cost of goods sold $20,000 LIFO reserve $20,000