The inventories of Berry Company for the years 2016 and 2017 are as follows:

	Cost	Market
January 1, 2016	$10,000	$10,000
December 31, 2016	13,000	11,500
December 31, 2017	15,000	14,000

Berry uses a perpetual inventory system.

Required:

1.

Assume the inventory that existed at the end of 2016 was sold in 2017. 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 Explain any differences in inventory valuation and income between the two methods.