The inventories of Berry Company for the years 2013 and 2014 are as follows:

Required:
1. Assume the inventory that existed at the end of 2013 was sold in 2014. 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 Refer to your answer for E8-4. How does the use of a periodic or perpetual inventory system affect the valuation of inventory?

Transcribed Image Text:

Market Cost $10,000 15,000 January 1, 2013 December 31, 2013 $10,000 13,000 14 000 11,500 December 31, 2014