Instructions The following are the inventories for the years 2019, 2020, and 2021 for Parry Company: January 1, 2019 December 31, 2019 December 31, 2020 December 31, 2021 Cost $50,000 64,000 71,000 75,000 NRV $50,000 60,000 70,000 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 net realizable value for each of the following alternatives: a. allowance method, perpetual inventory system b. direct method, perpetual inventory system 2. Next Level Explain any differences in inventory valuation and income between the two methods. 1a. 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, 2019 2. the reduction in inventory when the inventory from December 31, 2019 is sold during 2020 3. the correct inventory valuation on December 31, 2020 4. the reduction in inventory when the inventory from December 31, 2020 is sold during 2021 5. the correct inventory valuation on December 31, 2021 (if necessary) PAGE 1 GENERAL JOURNAL DATE ACCOUNT TITLE POST. REF. DEBIT CREDIT 1 2 3 5 6 7 10 16. 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, 2019 2. the reduction in inventory when the inventory from December 31, 2019 is sold during 2020 3. the correct inventory valuation on December 31, 2020 4. the reduction in inventory when the inventory from December 31, 2020 is sold during 2021 5. the correct inventory valuation on December 31, 2021 (if necessary) MET GENERAL JOURNAL DATE ACCOUNT TITLE POST. REF DEBIT CREDIT 1 2 3 4 2a. Enter the effect on income with the write down of inventory at December 31 each year under each method. Additional Instructions Direct Method Allowance Method $ $ Effect on Income December 31, 2019 December 31, 2020 December 31, 2021 $ $ $ $ 2b. Enter the value of inventory at December 31 each year under each method. Direct Method Allowance Method Inventory valuation December 31, 2019 December 31, 2020 December 31, 2021 $ $