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Vaughn 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.

$($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

$0$ for the amounts. Record journal entries in the order presented in the problem.$)$

$($b$)$ Prepare journal entries required at December $31,2025,$ and December $31,2026,$ assuming inventory is recorded at LCNRV and a

perpetual system using the loss 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 $0$ for the amounts. Record

journal entries in the order presented in the problem.$)$

Date

Account Titles and Explanation

Debit

Credit

$]$

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

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