Instructions The inventories of Berry Company for the years 2019 and 2020 are as follows: Cost NRV January 1, 2019 $10,000 $10,000 December 31, 2019 13,000 11,500 December 31, 2020 15,000 14,000 Berry uses the periodic inventory method and the FIFO inventory cost flow assumption. Required: 1. Assume the inventory that existed at the end of 2019 was sold in 2020. Prepare the necessary journal entries at the end of each year to record the correct inventory valuation if Berry uses the: a. direct method b. allowance method 2. Next Level Consider the differences between the direct method and the allowance method with regard to inventory valuation and income. How does the use of a periodic or perpetual inventory system affect the valuation of inventory? General Ledger ASSETS 111 Cash 121 Accounts Receivable 131 Inventory 132 Allowance to Reduce Inventory to NRV 141 Prepaid Insurance 181 Equipment 189 Accumulated Depreciation LIABILITIES 211 Accounts Payable 221 Salaries Payable 231 Unearned Rent 261 Income Taxes Payable REVENUE 411 Sales Revenue EXPENSES 500 Cost of Goods Sold 505 Loss on Write-Down of Inventory 510 Purchases 531 Salaries Expense 532 Delivery Expense 533 Insurance Expense 534 Utilities Expense 541 Depreciation Expense 559 Miscellaneous Expenses 910 Income Tax Expense EQUITY 311 Common Stock 331 Retained Earnings 391 Income Summary 1a. Prepare the necessary journal entries to close and property value inventory on December 31 of each year assuming that Berry uses a periodic inventory system and the direct method. General Journal Instructions How does grading work? 1 DATE Dec. 31, 2019 Cost of Goods Sold PAGE 1 GENERAL JOURNAL Score: 50/101 ACCOUNT TITLE POST. REX DEBIT CREDIT 1,500.00 2 Inventory 1,500.00 3 Dec. 31, 2019 Cost of Goods Sold Inventory 11,500.00 11,500.00 5 Cost of Goods Sold 1,000.00 Inventory 1,000.00 Loss on Write-Down of Inventory 1,500.00 Allowance to Reduce Inventory to NRV 1,500.00 1b. Prepare the necessary journal entries to close and properly value inventory on December 31 of each year assuming that Berry uses a periodic inventory system and General Journal Instructions 1 DATE Dec. 31, 2019 Cost of Goods Sold GENERAL JOURNAL PAGE Score: 112/163 ACCOUNT TITLE POST. REF DEBIT CREDIT 1,500.00 2 Inventory 1,500.00 3 5 Cost of Goods Sold Inventory Cost of Goods Sold 11,500.00 11,500.00 1,000.00 6 Inventory 1,000.00 7 Loss on Write-Down of Inventory 1,500.00 8 Allowance to Reduce Inventory to NRV 1,500.00 9 Cost of Goods Sold 11,500.00 10 Allowance to Reduce Inventory to NRV 1,500.00 11 Inventory 13,000.00 12 Loss on Write-Down of Inventory 1,000.00 13 Allowance to Reduce Inventory to NRV 1,000.00