XYZ Company began operations in 2018 and determined its ending inventory at cost and at a LCNRV at December 31, 2018, and December 31, 2019. This information is presented below. Cost Net Realizable Value 12/31/18 £520,000 £485,000 12/31/19 615,000 585,000 Instructions (you have the option to upload the answer sheet) (a) Prepare the journal entries required at December 31, 2018, and December 31, 2019, assuming that the inventory is recorded at LCNRV, using a perpetual inventory system and the cost-of-goods-sold method. (b) Prepare the journal entries required at December 31, 2018, and December 31, 2019, assuming that the inventory is recorded at cost, using a perpetual system and the loss method. (c) Which of the two methods above provides the higher net income in each year?

XYZ Company began operations in 2018 and determined its ending inventory at cost and at a LCNRV at December 31, 2018, and December 31, 2019. This information is presented below. Cost Net Realizable Value 12/31/18 £520,000 £485,000 12/31/19 615,000 585,000 Instructions (you have the option to upload the answer sheet) (a) Prepare the journal entries required at December 31, 2018, and December 31, 2019, assuming that the inventory is recorded at LCNRV, using a perpetual inventory system and the cost-of-goods-sold method. (b) Prepare the journal entries required at December 31, 2018, and December 31, 2019, assuming that the inventory is recorded at cost, using a perpetual system and the loss method. (c) Which of the two methods above provides the higher net income in each year?

Financial Accounting

15th Edition

ISBN:9781337272124

Author:Carl Warren, James M. Reeve, Jonathan Duchac

Publisher:Carl Warren, James M. Reeve, Jonathan Duchac

Chapter7: Inventories

Section: Chapter Questions

Problem 5PA: Dymac Appliances uses the periodic inventory system. Details regarding the inventory of appliances...

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