Instructions General Journal Next Level The following are the inventories for the years 2016, 2017, and 2018 for Parry Company Cost Market 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. Prepare journal entries to close and property value inventory on December 31 each year for each of the following alternatives a. allowance method, periodic inventory system b. direct method, periodic inventory system 2. Next Level Refer to your answer for PB-2 How does the use of the periodic inventory system affect the write-down of inventory to the lower of cost or market? Chart of Accounts ASSETS 111 Cash 121 Accounts Receivable 131 Inventory 132 Allowance to Reduce Inventory to Market 141 Prepaid Insurance 181 Equipment 189 Accumulated Depreciation REVENUE 411 Sales Revenue EXPENSES 500 Cost of Goods Sold 505 Loss Due to Market Valuation 511 Insurance Expense 512 Utilities Expense 521 Salaries Expense LIABILITIES 211 Accounts Payable 231 Salaries Payable 250 Unearned Revenue 261 Income Taxes Payable 532 Bad Debt Expense 540 Interest Expense 541 Depreciation Expense 559 Miscellaneous Expenses 910 Income Tax Expense EQUITY 311 Common Stock 331 Retained Earnings 391 Income Summary Prepare the necessary journal entries to close and property value inventory on December 31 each year assuming that Parry uses a periodic inventory system and the allowance method. Additional Instructions GENERAL JOURNAL DATE ACCOUNT TITLE 1 2 PAGE 2016 PAGE 2017 PAGE 2018 POST REF DEBIT CREDIT Prepare the necessary journal entries to close and property value inventory on December 31 each year assuming that Parry uses a periodic inventory system and the direct method. Additional Instructions PAGE 2016 PAGE 2017 PAGE 2018 Prepare the necessary journal entries to close and property value inventory on December 31 each year assuming that Parry uses a periodic inventory system and them direct method. Additional Instructions 2 PAGE 2016 PAGE 2017 PAGE 2016 GENERAL JOURNAL POST REF DEBIT CREDIT DATE ACCOUNT TITLE Next Level In P8-2, the differences between the direct method and the allowance method with regard to inventory valuation and income was explored How does the use of the periodic inventory system affect the write-down of inventory to the lower of cost or market? Enter the effect on income with the write down of inventory at December 31 each year under each method Effect on Income December 31, 2016 December 31, 2017 December 31, 2018. Periodic Enter the net value of inventory at December 31 each year under each method Inventory valuation December 31, 2016 December 31, 2017 December 31, 2018 Periodic Perpetual Perpetual