Question

As a result of its annual inventory count, Bridgeport Corp. determined its ending inventory at cost and at lower of cost and net realizable value at December 31, 2019, and December 31, 2020. December 31, 2019, was Bridgeport’s first year end. This information is as follows:

		Cost			Lower of Cost and NRV
Dec. 31, 2019		$	321,300		$284,050
Dec. 31, 2020			385,400		351,950

Prepare the journal entries required at December 31, 2019 and 2020, assuming that the inventory is recorded at cost and an allowance account is adjusted at each year end under a periodic system. (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 0 for the amounts.)

Date	Account Titles and Explanation	Debit	Credit
12/31/19	enter an account title to record ending inventory at cost on December 31, 2019	enter a debit amount	enter a credit amount
	enter an account title to record ending inventory at cost on December 31, 2019	enter a debit amount	enter a credit amount
	(To record ending inventory at cost)
12/31/19	enter an account title to write-down inventory to lower NRV on December 31, 2019	enter a debit amount	enter a credit amount
	enter an account title to write-down inventory to lower NRV on December 31, 2019	enter a debit amount	enter a credit amount
	(To write-down inventory to lower NRV)
12/31/20	enter an account title to transfer out beginning inventory balance on December 31, 2020	enter a debit amount	enter a credit amount
	enter an account title to transfer out beginning inventory balance on December 31, 2020	enter a debit amount	enter a credit amount
	(To transfer out beginning inventory balance)
12/31/20	enter an account title to record ending inventory at cost on December 31, 2020	enter a debit amount	enter a credit amount
	enter an account title to record ending inventory at cost on December 31, 2020	enter a debit amount	enter a credit amount
	(To record ending inventory at cost)
12/31/20	enter an account title to record recovery of write down of inventory to lower NRV on December 31, 2020	enter a debit amount	enter a credit amount
	enter an account title to record recovery of write down of inventory to lower NRV on December 31, 2020	enter a debit amount	enter a credit amount
	(To record recovery of write down of inventory to lower NRV)

Answer 1

Date	Account Titles	Debit	Credit
12/31/19	Inventory	$        321,300
	Cost of Goods Sold		$            321,300
	(To record ending inventory at cost)
12/31/19	Loss on Inventory due to lower NRV	$           37,250
	Allowance to reduce inventory		$              37,250
	(To write-down inventory to lower NRV)
12/31/20	Cost of Goods Sold	$        321,300
	Inventory		$            321,300
	(To transfer out beginning inventory balance)
12/31/20	Inventory	$        385,400
	Cost of Goods Sold		$            385,400
	(To record ending inventory at cost)
12/31/20	Allowance to reduce inventory	$             3,800
	Gain on Inventory		$                 3,800
	(To record recovery of write down of inventory to lower NRV)