Corrs Company began operations in 2016 and determined its ending inventory at cost and at lower-of-LIFO cost-or-market at December 31, 2016, and December 31, 2017. This information is presented below.

Cost

Lower-of-Cost-or-Market

12/31/16

$356,000

$327,000

12/31/17

420,000

395,000

Instructions

(a)Prepare the journal entries required at December 31, 2016, and December 31, 2017, assuming that the inventory is recorded at market, and a perpetual inventory system (cost-of-goods-sold method) is used.

(b)Prepare journal entries required at December 31, 2016, and December 31, 2017, assuming that the inventory is recorded at market under a perpetual system (loss method is used).

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

E9-8 (LO2) (Lower-of-Cost-orMarket-Journal Entries) Corrs Company began operations in 2016 and determined its ending inventory at cost and at lower-of-LIFO cost-or-market at December 31, 2016, and December 31, 2017. This information is presented below