E9-4 Dover Company began operations in 2012 and determined its ending inventory at cost and at the lower of cost or market at December 31, 2012 and December 31, 2013 . This information is presented below.
Cost lower of cost or market
12/31/12 $346,000 $322,000
12/31/12 410,000 390,000
a) Prepare the journal entries required at December 31,2012 and December 31,2013 assuming that the inventory is recorded at lower of cost or market and a perpetual inventory system. Assume the cost of goods sold method with no allowance used.
b) Prepare journal entries required at December 31, 2012 and December 31,2013 assuming that the inventory is recorded at lower of cost or market and a perpetual inventory system. Assume the loss method with an allowance used.
c) Which of the 2 methods above provides the higher net income in each year?
Click here for the solution: Dover Company began operations in 2012 and determined its ending inventory at cost and at the lower of cost or market at December 31, 2012 and December 31, 2013
