The following are the inventory for the years 2016, 2017, and 2018 for parry Company:

Required:
1. Assume the inventory that existed at the end of each year was sold in the subsequent year. Prepare journal entries to record the lower of cost or market for each of the following alternatives:
a. Allowance method, periodic inventory system
b. Direct method, periodic inventory system
2. Next Level Refer to your answer for P8-2. How does the use of the periodic inventory system affect the write-down of inventory to the lower of cost or market?

Transcribed Image Text:

Cost Market January1, 2016 December 31, 2016 December 31, 2017 December 31, 2018 $50,000 $%50,000 60,000 70,000 64,000 71,000 75,000 78,000