Dover Company began operations in 2018 and determined its ending inventory at cost and at a LCNRV at December 31, 2018, and December 31, 2019.

This information is presented below.

Cost Net Realizable Value 12/31/18 520,000 485,000 12/31/19 615,000 585,000

Instructions

(a) what should we do with the cost of goods sold at December 31, 2018 and December 31, 2019? should we increased or decreased it and by how much?

(b) calculate the net inventory balance and the allowance account at December 31, 2018 and December 31, 2019, assuming that the inventory is recorded at LCNRV, using a perpetual inventory system and the cost of goods sold method?