At the beginning of October, Bowser Companys inventory consists of 69 units with a cost per unit of $31. The following transactions occur during the month of October.

October 4			Purchase 111 units of inventory on account from Waluigi Company for $50 per unit, terms 2/10, n/30.
October 5			Pay cash for freight charges related to the October 4 purchase, $430.
October 9			Return 25 defective units from the October 4 purchase and receipt of credit.
October 12			Pay Waluigi Company in full.
October 15			Sell 141 units of inventory to customers on account, $11,280. (Hint: The cost of units sold from the October 4 purchase includes $50 unit cost plus $5 per unit for freight less $1 per unit for the purchase discount, or $54 per unit.)
October 19			Receive full payment from customers related to the sale on October 15.
October 20			Purchase 81 units of inventory from Waluigi Company for $51 per unit.
October 22			Sell 81 units of inventory to customers for cash, $6,480.

Required:

1. Assuming that Bowser Company uses a FIFO perpetual inventory system to maintain its inventory records, record the transactions. 2. Suppose by the end of October that the remaining inventory is estimated to have a net realizable value per unit of $27. Record any necessary adjusting entry for lower of cost and net realizable value. 3. Prepare the top section of the multiple-step income statement through gross profit for the month of October after the adjusting entry for lower of cost and net realizable value

Required 1

1

Record purchase of 111 units of inventory on account from Waluigi company for $50 per unit, terms 2/10, n/30.

2

Record payment of cash for freight charges related to the October 4 purchase, $430.

3

Record return of 25 defective units from the October 4 purchase and receipt of credit.

4

Record payment to Waluigi company in full.

5

Record the sale of 141 units of inventory to customers on account, $11,280.

6

Record the cost of inventory sold.

7

Record receipt of full payment from customers related to the sale on October 15.

8

Record purchase of 81 units of inventory from Waluigi company for $51 per unit.

9

Record the sale of 81 units of inventory to customers for cash, $6,480.

10

Record the cost of inventory sold.

Required 2

Suppose by the end of October that the remaining inventory is estimated to have a net realizable value per unit of $27. Record any necessary adjusting entry for lower of cost and net realizable value. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)

Journal entry worksheet

Record any necessary adjusting entry for lower of cost and net realizable value.

Required 3

Prepare the top section of the multiple-step income statement through gross profit for the month of October after the adjusting entry for lower of cost and net realizable value.

BOWSER COMPANY
Multiple-Step Income Statement (partial)
For the Month of October
Net Sales