Your answer is partially correct. Sheridan Company began operations in 2025 and determined its ending inventory at cost and at LCNRV at December 31, 2025, and December 31, 2026. This information is presented below. Cost Net Realizable Value 12/31/25 $337,080 12/31/26 416,500 $315,400 398,730 (a) Prepare the journal entries required at December 31, 2025, and December 31, 2026, assuming inventory is recorded at LCNRV and a perpetual inventory system using the cost-of-goods-sold method. (List all debit entries before credit entries. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter O for the amounts. Record journal entries in the order presented in the problem.) Date Account Titles and Explanation 12/31/25 Cost of Goods Sold Allowance to Reduce Inventory to NRV 12/31/26 Allowance to Reduce Inventory to NRV Cost of Goods Sold Debit 21680 3910 Credit 21680 3910 (b) Prepare journal entries required at December 31, 2025, and December 31, 2026, assuming inventory is recorded at LCNRV and a perpetual system using the loss method. (List all debit entries before credit entries. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter O for the amounts. Record journal entries in the order presented in the problem.) Date Account Titles and Explanation 12/31/25 Loss Due to Decline of Inventory to NRV Allowance to Reduce Inventory to NRV 12/31/26 Allowance to Reduce Inventory to NRV Recovery of Loss Inventory (c) Which of the two methods above provides the higher net income in each year? Both methods have the same effect Debit 21680 3910 Credit 21680 3910 Date Account Titles and Explanation 12/31/25 Cost of Goods Sold Allowance to Reduce Inventory to Market 12/31/26 Allowance to Reduce Inventory to Market Cost of Goods Sold to Market Debit 21680 17770 Credit 21680 17770 (b) Prepare journal entries required at December 31, 2025, and December 31, 2026, assuming inventory is recorded at LCNRV and a perpetual system using the loss method. (List all debit entries before credit entries. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter O for the amounts. Record journal entries in the order presented in the problem.) Date 12/31/25 12/31/26 Account Titles and Explanation Loss Due to Market Decline of Inventory Allowance to Reduce Inventory to Market Allowance to Reduce Inventory to Market Loss Due to Market Decline of Inventory Debit 21680 17770 Credit 21680 17770