Milford Company determined its ending inventory at cost and at lower of cost and net realizable value at December 31, 2018, 2019, and 2020, as follows:

Instructions

a. Prepare the journal entries that are required at December 31, 2019 and 2020, 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, 2019 and 2020, assuming that a periodic inventory system is used, with inventory recorded at cost and reduced to NRV through the use of an allowance account.

Transcribed Image Text:

Lower of Cost and Net Realizable Value Cost Dec. 31, 2018 Dec. 31, 2019 $60,000 $60,000 79,000 Dec. 31, 2020 69,000 78,800