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Crane Company began operations in 2019 and determined its ending inventory at cost and at lower-of-LIFO...

Crane Company began operations in 2019 and determined its ending inventory at cost and at lower-of-LIFO cost-or-market at December 31, 2019, and December 31, 2020. This information is presented below:

Cost

Lower-of-Cost-or-Market
12/31/19 $355,290 $336,930
12/31/20 414,220 400,040


(a) Prepare the journal entries required at December 31, 2019, and December 31, 2020, assuming that the inventory is recorded at market, and a perpetual inventory system (cost-of-goods-sold method) is used. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter 0 for the amounts.)

Date

Account Titles and Explanation

Debit

Credit

12/31/19

12/31/20


(b) Prepare journal entries required at December 31, 2019, and December 31, 2020, assuming that the inventory is recorded at market under a perpetual system (loss method is used). (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter 0 for the amounts.)

Date

Account Titles and Explanation

Debit

Credit

12/31/19

12/31/20


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

Solutions

Expert Solution

ekkarill92 answered 2 years ago
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