Shalini Ltd. manufactures RV trailers.On December 31, 2019, Shalini has 150 units of its Escape RV trailer at a cost of $11,000 per unit.As a result of change in customer preferences and decreased demand for this unit, management believes that the Escape can only be sold for $10,000 each.Shalini pays sales commissions of 5% on the selling price.

Required:

1. Prepare the entry at December 31, 2019 assuming that the allowance method is used for lower of cost or NRV.
2. Assume that Shalini prepares quarterly financial statements and assesses NRV at quarter end.On March 31, in the midst of COVID, Shalini management believes that the demand for the Escape RV will skyrocket as families cancel their other summer vacation plans.Shalini still has 90% of its inventory and has increased the Escapes selling price to $14,000 per unit; sales commissions are still 5%.Record the adjusting entry for inventory