Enter the effect on income with the write down of inventory at December 31 each year under each method.

December 31, 2016
December 31, 2017
December 31, 2018

The following are the inventories for the years 2016, 2017, and 2018 for Parry Company:

January 1, 2016	$50,000	$50,000
December 31, 2016	64,000	60,000
December 31, 2017	71,000	70,000
December 31, 2018	75,000	78,000

Required:
1.	Assume the inventory that existed at the end of each year was sold in the subsequent year. Prepare journal entries to record the lower of cost or market for each of the following alternatives. a.allowance method, perpetual inventory system b.direct method, perpetual inventory system
2.	Next LevelExplain any differences in inventory valuation and income between the two methods.

Assume Parry uses the allowance method and a perpetual inventory system.

Prepare the necessary journal entries to record:

1. the correct inventory valuation on December 31, 2016

2. the reduction in inventory when the inventory from December 31, 2016 is sold during 2017Additional Instructions

3. the correct inventory valuation on December 31, 2017

4. the reduction in inventory when the inventory from December 31, 2017 is sold during 2018Additional Instructions

3. the correct inventory valuation on December 31, 2018 (if necessary)

All transactions on this page must be entered (except for post ref(s)) before you will receive Check My Work feedback. PAGE 9 GENERAL JOURNAL Score:57/125

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Points: 10.94 / 24 Assume Parry uses the direct method and a perpetual inventory system.

Prepare the necessary journal entries to record:

1. the correct inventory valuation on December 31, 2016

2. the reduction in inventory when the inventory from December 31, 2016 is sold during 2017Additional Instructions

3. the correct inventory valuation on December 31, 2017

4. the reduction in inventory when the inventory from December 31, 2017 is sold during 2018Additional Instructions

3. the correct inventory valuation on December 31, 2018 (if necessary)

Question not attempted. PAGE 9 GENERAL JOURNAL Score:0/101

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