Should have two general journals, one for dec 31 2016 and one for dec 31 2017.

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.

NEXT LEVEL: Complete the statements below that explain any differences in inventory valuation and income between the two methods.

The two methods produce the same net inventory valuations and have the same effects on net income. At the end of 2017, inventory would be valued at ______ under the direct method and _______ under the allowance method. Income would be reduced by _________ after the entry to reduce inventory to market under the direct method and ________ after the entry to reduce inventory to market under the allowance method.