Milford Company determined its ending inventory at cost and at lower of cost and net realizable value at December 31, 2015, 2016, and 2017, as follows:

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Instructions
(a) Prepare the journal entries that are required at December 31, 2016 and 2017, assuming that a periodic inventory system and the direct method of adjusting to NRV are used.
(b) Prepare the journal entries that are required at December 31, 2016 and 2017, assuming that a periodic inventory system is used, with inventory recorded at cost and reduced to NRV through the use of an allowance account.

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Dec. 31, 2015 Dec. 31, 2016 Dec. 31, 2017 Cost $60,000 79,000 78,800 Lower of Cost and Net Realizable Value $60,000 74,500 69,000