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The inventories of Berry Company for the years 2019 and 2020 are as follows: Cost NRV January 1, 2019 $9,000 $9,000 December 31, 2019 13,000

The inventories of Berry Company for the years 2019 and 2020 are as follows:

Cost NRV
January 1, 2019 $9,000 $9,000
December 31, 2019 13,000 11,500
December 31, 2020 16,000 14,000

Berry uses a perpetual inventory system 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 LevelExplain any differences in inventory valuation and income between the two methods.

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