The following are the inventories for the years 2013, 2014, and 2015 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, perpetual inventory system
b. direct method, perpetual inventory system
2. Next Level Explain any differences in inventory valuation and income between the two methods.

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Cost Market January 1, 2013 December 31, 2013 December 31, 2014 December 31, 2015 $50,000 64,000 71,000 75,000 $50,000 60,000 70,000 78,000