(INVENTORIES) MC Inc. uses a perpetual inventory system. At January 1, 2019, inventory was $1,000,000 at both cost and net realizable value. At December 31, 2019 the inventory was $1,370,000 at cost and $1,255,000 at net realizable value (NRV).

Required:

a) Prepare the necessary December 31, 2019 journal entry under indirect method.

b) Prepare partial balance sheets as of December 31, 2019.