The inventories of Berry Company for the years 2019 and 2020 are as follows:

Berry uses the periodic inventory method and the FIFO inventory cost flow assumption.

Required:
1. Assume the inventory that existed at the end of 2019 was sold in 2020. Prepare the necessary journal entries at the end of each year to record the correct inventory valuation if Berry uses the:
a. direct method
b. allowance method
2. How does the use of a periodic or perpetual inventory system affect the valuation of inventory?

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Cost NRV January 1, 2019 December 31, 2019 December 31, 2020 $10,000 13,000 15,000 $10,000 11,500 14,000