Lower of Cost or Market
Response to the following problem:
The following are the inventories for the years 2010, 2011, and 2012 for the Parry Company:
|
|
Cost
|
Market
|
|
January 1, 2010
|
$50,000
|
550,000
|
|
December 31, 2010
|
64,000
|
60,000
|
|
December 31, 2011
|
71,000
|
70,000
|
|
December 31, 2012
|
75,000
|
78,000
|
Required
Prepare journal entries to record the lower of cost or market for each of the following alternatives:
1. Allowance method, periodic inventory system
2. Allowance method, perpetual inventory system
3. Direct method, periodic inventory system
4. Direct method, perpetual inventory system