Answer:
a.)
Date | Particulars | Debit ($) | Credit ($) |
12/31/2019 | Cost of goods sold | 20740 | |
Allowance to reduce inventory to NRV (380130-359390) | 20740 | ||
12/31/2020 | Allowance to reduce inventory to NRV (380130-359390)-(375650-358630) | 3720 | |
Cost of goods sold | 3720 |
b)
Date | particulars | Debit ($) | Credit ($) |
12/31/2019 | Loss due to decline inventory to NRV (380130-359390) | 20740 | |
Allowance to reduce inventory to NRV | 20740 | ||
12/31/2020 | Allowance to reduce inventory to NRV (380130-359390)-(375650-358630) | 3720 | |
Inventory loss | 3720 |
c)
Calculated net income under cost of goods sold method and loss
method are same. Therefore the correct answer is "Both methods have
the same effect"
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