As a result of its annual inventory count, Ayayai Corp. determined its ending inventory at cost and at lower of cost and net realizable value at December 31, 2019, and December 31, 2020. December 31, 2019, was Ayayais first year end. This information is as follows:

		Cost			Lower of Cost and NRV
Dec. 31, 2019		$	321,100		$284,050
Dec. 31, 2020			385,500		351,850

a)

b)

Prepare the journal entries required at December 31, 2019 and 2020, assuming that the inventory is recorded directly at the lower of cost and net realizable value and a periodic inventory system is used. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter for the amounts.) Date Account Titles and Explanation Debit Credit 12/31/19 (To record ending inventory at LC and NRV) 12/31/20 (To transfer out beginning inventory balance) 12/31/20 (To record ending inventory at LC and NRV) Prepare the journal entries required at December 31, 2019 and 2020, assuming that the inventory is recorded at cost and an allowance account is adjusted at each year end under a periodic system. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter for the amounts.) Date Account Titles and Explanation Debit Credit 12/31/19 Inventory 321100 Cost of Goods Sold 321100 (To record ending inventory at cost) 12/31/19 Loss on Inventory Due to Decline in NRV 37050 37050 (To write-down inventory to lower NRV) 12/31/20 Cost of Goods Sold Inventory (To transfer out beginning inventory balance) 12/31/20 Inventory 385500 Cost of Goods Sold 385500 (To record ending inventory at cost) 12/31/20 (To record recovery of write down of inventory to lower NRV)