As a result of its annual inventory count,BrambleCorp. 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, wasBramble's first year end. This information is as follows:

CostLower of Cost

and NRVDec. 31, 2019$321,000$283,350Dec. 31, 2020385,100351,950

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.)

Date

Account Titles and Explanation

Debit

Credit

12/31/19enter an account title to record ending inventory at LC and NRV on December 31, 2019

enter a debit amount

enter a credit amount

enter an account title to record ending inventory at LC and NRV on December 31, 2019

enter a debit amount

enter a credit amount

(To record ending inventory at LC and NRV)12/31/20enter an account title to transfer out beginning inventory balance on December 31, 2020

enter a debit amount

enter a credit amount

enter an account title to transfer out beginning inventory balance on December 31, 2020

enter a debit amount

enter a credit amount

(To transfer out beginning inventory balance)

12/31/20enter an account title to record ending inventory at LC and NRV on December 31, 2020

enter a debit amount

enter a credit amount

enter an account title to record ending inventory at LC and NRV on December 31, 2020

enter a debit amount

enter a credit amount

(To record ending inventory at LC and NRV)

eTextbook and Media

List of Accounts

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.)

Date

Account Titles and Explanation

Debit

Credit

12/31/19enter an account title to record ending inventory at cost on December 31, 2019

enter a debit amount

enter a credit amount

enter an account title to record ending inventory at cost on December 31, 2019

enter a debit amount

enter a credit amount

(To record ending inventory at cost)

12/31/19enter an account title to write-down inventory to lower NRV on December 31, 2019

enter a debit amount

enter a credit amount

enter an account title to write-down inventory to lower NRV on December 31, 2019

enter a debit amount

enter a credit amount

(To write-down inventory to lower NRV)

12/31/20enter an account title to transfer out beginning inventory balance on December 31, 2020

enter a debit amount

enter a credit amount

enter an account title to transfer out beginning inventory balance on December 31, 2020

enter a debit amount

enter a credit amount

(To transfer out beginning inventory balance)

12/31/20enter an account title to record ending inventory at cost on December 31, 2020

enter a debit amount

enter a credit amount

enter an account title to record ending inventory at cost on December 31, 2020

enter a debit amount

enter a credit amount

(To record ending inventory at cost)

12/31/20enter an account title to record recovery of write down of inventory to lower NRV on December 31, 2020

enter a debit amount

enter a credit amount

enter an account title to record recovery of write down of inventory to lower NRV on December 31, 2020

enter a debit amount

enter a credit amount

(To record recovery of write down of inventory to lower NRV)

eTextbook and Media

List of Accounts

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

select a method

The method in which inventory is recorded directly at the lower of cost and net realizable value is higher.

The method in which inventory is recorded at cost and an allowance account is adjusted at each year end is higher.

Both methods have the same effect on net income.

eTextbook and Media

List of Accounts