accounting

I have tried to figure out how to do this for four days and my textbook does not give an example on how to do this problem.
Lower-of-Cost-or-Market
Corrs Company began operations in 2007 and determined its ending inventory at cost and at lower of cost or market at December 31, 2007, and December 31, 2008. This information is presented below:

Cost Lower of Cost or
Market
12/31/07 $346,000 $327,000
12/31/08 410,000 395,000

Instructions:

a.)Prepare the journal entries required at December 31, 2007 and December 31, 2008, assuming that the inventory is recorded at market, and a perpetual inventory system (direct method) is used.

b.)Prepare journal entries required at December 31, 2007, and December 31, 2008, assuming that the inventory is recorded at cost and an allowance account is adjusted at each year-end under a perpetual system.

c.)Which of the two methods above provides the higher net income in each year?

All I am asking for is somebody to give me an example on how to do this problem after that I should be able to do this.

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  1. SraJMcGin,
    Thank you for the information, but I still do not know how to set this problem up. The site was no help.

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