Splish Company began operations in 2020 and determined its ending inventory at cost and at LCNRV at December 31, 2020, and December 31, 2021. This information is presented below. 12/31/20 12/31/21 Cost Net Realizable Value $361,140 415,460 $336,200 394,860 (a) Prepare the journal entries required at December 31, 2020, and December 31, 2021, assuming inventory is recorded at LCNRV and a perpetual inventory system using the cost-of-goods-sold method. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter 0 for the amounts.) Date Account Titles and Explanation 12/31/20 12/31/21 Debit Credit (b) Prepare journal entries required at December 31, 2020, and December 31, 2021, assuming inventory is recorded at LCNRV and a perpetual system using the loss method. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter 0 for the amounts.) Date Account Titles and Explanation 12/31/20 12/31/21 Debit Credit (c) Which of the two methods above provides the higher net income in each year?
Splish Company began operations in 2020 and determined its ending inventory at cost and at LCNRV at December 31, 2020, and December 31, 2021. This information is presented below. 12/31/20 12/31/21 Cost Net Realizable Value $361,140 415,460 $336,200 394,860 (a) Prepare the journal entries required at December 31, 2020, and December 31, 2021, assuming inventory is recorded at LCNRV and a perpetual inventory system using the cost-of-goods-sold method. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter 0 for the amounts.) Date Account Titles and Explanation 12/31/20 12/31/21 Debit Credit (b) Prepare journal entries required at December 31, 2020, and December 31, 2021, assuming inventory is recorded at LCNRV and a perpetual system using the loss method. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter 0 for the amounts.) Date Account Titles and Explanation 12/31/20 12/31/21 Debit Credit (c) Which of the two methods above provides the higher net income in each year?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Splish Company began operations in 2020 and determined its ending inventory at cost and at LCNRV at December 31, 2020, and December 31, 2021. This information is presented below.
12/31/20
12/31/21
Cost
Net Realizable Value
$361,140
415,460
$336,200
394,860
(a) Prepare the journal entries required at December 31, 2020, and December 31, 2021, assuming inventory is recorded at LCNRV and a perpetual inventory system using the cost-of-goods-sold method. (Credit account titles are automatically indented when amount is entered. Do not indent
manually. If no entry is required, select "No entry" for the account titles and enter 0 for the amounts.)
Date
Account Titles and Explanation
12/31/20
12/31/21
Debit
Credit
(b) Prepare journal entries required at December 31, 2020, and December 31, 2021, assuming inventory is recorded at LCNRV and a perpetual system using the loss method. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is
required, select "No entry" for the account titles and enter 0 for the amounts.)
Date Account Titles and Explanation
12/31/20
12/31/21
Debit
Credit
(c) Which of the two methods above provides the higher net income in each year?
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