Dover plc began operations in 2022 and determined its ending inventory at cost and at NRV at December 31, 2022, and December 31, 2023. This information is presented below.

Instructions

a. Prepare the journal entries required at December 31, 2022, and December 31, 2023, assuming inventory is recorded at LCNRV and a perpetual inventory system using the cost-of-goods-sold method.

b. Prepare journal entries required at December 31, 2022, and December 31, 2023, assuming inventory is recorded at cost with a perpetual system. Use the loss method to record any LCNRV.

c. Which of the two methods above provides the higher net income in each year?

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Cost Net Realizable Value 12/31/22 £346,000 £322,000 12/31/23 410,000 390,000