The controller of Pure Metals has provided you with the following information relating to its inventory:

Date Cost Lower of cost and NRV

Dec 31/20 Group one $129,200 $ 96,000

Dec 31/21 Group Two $239,000 $201,000

Pure Metals uses the periodic inventory system, and records its inventory at cost. An allowance account is adjusted at the end of each year to adjust the value of the inventory to the lower of cost and NRV. The controller believes the Allowance method is superior to the direct method because the company groups its inventory making it difficult to isolate specific items for a write down to net realizable value.

Instructions

Prepare the journal entries that Pure Metals would have prepared for its 2020 and 2021 year ends, assuming that 2020 was its first year of operations.