Sunland Company began operations in 2025 and determined its ending inventory at cost and at LCNRV at December 31, 2025, and December 31, 2026. This information is presented below. Cost 12/31/25 $354,760 12/31/26 417,750 (a) Prepare the journal entries required at December 31, 2025, and December 31, 2026, assuming inventory is recorded at LCNRV and a perpetual inventory system using the cost-of-goods-sold method. (List all debit entries before credit entries. 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 O for the amounts. Record journal entries in the order presented in the problem) Date 12/31/25 Net Realizable Value $328,570 395,700 12/31/26 Account Titles and Explanation Cost of Goods Sold Allowance to Reduce Inventory to NRV Allowance to Reduce Inventory to NRV Cost of Goods Sold Debit 26190 4140 Credit 26190 4140

Before discussing the topic inventory valuation let’s discuss the meaning of inventory. In accounting, inventory is also known as stock. Inventory means all the finished goods, materials, merchandise that a business holds for the purpose of selling it in…