Date	Cost	Lower-of-Cost- or market
12/31/16	356,000	327,00
12/31/17	420,000	394,000

Portland Pine 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 (information provided below).

Required:

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 the 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?