Kumar Inc. uses a perpetual inventory system. At January 1, 2013, inventory was $214,000 at both cost and market value. At December 31, 2013, the inventory was $286,000 at cost and $265,000 at market value. Prepare the necessary December 31 entry under: (a) the cost of goods sold method Description/Account Debit Credit Allowance to reduce inventory to marketSalesCost of goods soldCashGain due to market increase of inventoryInventoryLoss due to market decline of inventory Loss due to market decline of inventoryAllowance to reduce inventory to marketCost of goods soldCashInventoryGain due to market increase of inventorySales (b) the loss method Description/Account Debit Credit SalesGain due to market increase of inventoryCashAllowance to reduce inventory to marketLoss due to market decline of inventoryInventoryCost of goods sold Cost of goods soldInventoryAllowance to reduce inventory to marketLoss due to market decline of inventorySalesGain due to market increase of inventoryCash
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