As a result of its annual inventory count, Flounder 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 Flounders first year end. This information is as follows:

		Cost			Lower of Cost and NRV
Dec. 31, 2019		$	321,700		$283,350
Dec. 31, 2020			386,000		351,250

A. 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 0 for the amounts.)

B. 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 0 for the amounts.)

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

A list of possible accounts is as follows:

Accounts Payable Accounts Receivable Allowance to Reduce Inventory to NRV Biological Assets Buildings Cash Cost of Goods Sold Equipment Interest Expense Interest Income Interest Payable Interest Receivable Inventory Inventory Over and Short Land Liability for Onerous Contracts Loss on Inventory Due to Decline in NRV Loss on Purchase Contracts No Entry Purchase Discounts Purchase Discounts Lost Purchase Returns and Allowances Purchases Raw Materials Realized Gain or Loss Rebate Receivable Recovery of Loss on Inventory Due to Decline in NRV Refund Liability Retained Earnings Sales Returns and Allowances Sales Revenue Supplies Expense Unrealized Gain or Loss