Corrs Company began operations in 2013 and determined its ending inventory at cost and at… 1 answer below »

Corrs Company began operations in 2013 and determined its ending inventory at cost and at lower-of-cost-or-market at December 31, 2013, and December 31, 2014. This information is presented below.

CostLower-of-Cost-or-Market12/31/13$365,410$337,50012/31/14444,440424,110

(a)Prepare the journal entries required at December 31, 2013, and December 31, 2014, assuming that the inventory is recorded at market, and a perpetual inventory system (direct method) is used.(Credit account titles are automatically indented when amount is entered. Do not indent manually.)

DateAccount Titles and ExplanationDebitCredit12/31/1312/31/14

(b) Prepare journal entries required at December 31, 2013, and December 31, 2014, assuming that the inventory is recorded at cost and an allowance account is adjusted at each year-end under a perpetual system.(Credit account titles are automatically indented when amount is entered. Do not indent manually.)

DateAccount Titles and ExplanationDebitCredit12/31/1312/31/14

(c) Which of the two methods above provides the higher net income in each year?

Both methods have the same effectCost-of-goods-sold method with no allowance usedLoss method with an allowance used

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