Answered: Cost NRV January 1, 2019 December 31,…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Inventory Write-Down The following are the inventories for the years 2019, 2020, and 2021 for Parry Company:

Required:
1. Assume the inventory that existed at the end of each year was
sold in the subsequent year. Prepare journal entries to record the
lower of cost or net realizable value for each of the following
alternatives:
a. allowance method, perpetual inventory system
b. direct method, perpetual inventory system
2. Next Level Explain any differences in inventory valuation and
income between the two methods

Cost
NRV
January 1, 2019
December 31, 2019
December 31, 2020
December 31, 2021
$50,000
64,000
71,000
75,000
$50,000
60,000
70,000
78,000

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