(Lower-of-Cost-or-Market—Journal Entries) Dover Company began operations in 2012
(Lower-of-Cost-or-Market—Journal Entries) Dover Company began operations in 2012 and determined its ending inventory at cost and at lower-of-cost-or-market at December 31, 2012, and December 31, 2013. This information is presented below.CostLower-of-Cost-or-Market12/31/12$346,000$322,00012/31/13410,000390,000Instructions(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 two methods above provides the higher net income in each year?
