Business, 20.02.2020 04:32 rsmith4531

Corrs Company began operations in 2016 and determined its ending inventory at cost and at lower-of-LIFO cost-or-market at December 31, 2016, and December 31, 2017. This information is presented below:

Cost

Lower-of-Cost-or-Market

12/31/16 $356,000 $327,000
12/31/17 420,000 395,000

(a) Prepare the journal entries required at December 31, 2016, and December 31, 2017, assuming that the inventory is recorded at market, and a perpetual inventory system (cost-of-goods-sold method) is used.

(b) Prepare journal entries required at December 31, 2016, and December 31, 2017, assuming that the inventory is recorded at market under a perpetual system (loss method is used).

(c) Which of the two methods above provides the higher net income in each year? Both, COGS Method, or Loss Method?

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