Dover 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.

a. Prepare the journal entries required at December 31, 2020, and December 31, 2021, assuming that the inventory is recorded at LCNRV and a perpetual inventory system using the cost-of-goods-sold method is used.

b. Prepare journal entries required at December 31, 2020, and December 31, 2021, assuming that the inventory is recorded at cost and a perpetual system using the loss method is used.

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

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Net Realizable Value Cost 12/31/20 12/31/21 $346,000 410,000 $322,000 390,000