Question

Bluebell Enterprises Ltd.'s records reported an inventory cost of $55,600 and a net realizable value of $54,000 at December 31, 2015. At December 31, 2016, the records indicated a cost of $68,700 and a net realizable value of $61,625. All opening inventory had been sold during the year. *(a) Your answer is correct. Assuming that Bluebell Enterprises uses a perpetual inventory system, prepare the necessary December 31, 2016 entry under the direct method and the indirect method. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter o for the amounts.) Date Account Titles and Explanation Debit Credit Direct method December 31, 2016 Cost of Goods Sold 7,0755 Inventory Indirect method December 31, 2016 Loss on Inventory Due to Decline in NRV) 15,475 Allowance to Reduce Inventory to NRV 15,475 17.075 Attempts: 3 of 5 used *(61) Your answer is partially correct. Try again. Assume that at December 31, 2017, the records indicate inventory with a cost of $60,000 and a net realizable value of $60,900. Prepare the necessary December 31, 2017 entry under the direct method and the indirect method. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter o for the amounts.) Date Debit Credit Account Titles and Explanation Direct method December 31, 2017 TInventory 10000 o Cost of Goods Sold 1600 Indirect method December 31, 2017 Allowance to Reduce Inventory to NRV Loss on Inventory Due to Decline in NRV 900 Attempts: 2 of 5 used

Answer 1

Journal entry

Date	General journal	Debit	Credit
	Direct method
Dec 31,2017	No entry
	Indirect method
Dec 31,2017	Allowance to reduce Inventory to NRV	7075
	Gain on inventory due to incline in NRV		7075