Presented below is information related to Webby Inc.

Jan. 31 Feb. 28 Mar. 31 Apr. 30

Inventory at cost $21,500 $23,000 $19,010 $24,000

Inventory at the lower-of-cost-or-market 20,000 20,500 16,500 23,100

Purchases for the month 49,000 43,000 51,000

Sales for the month 71,000 76,000 67,000

(a) From the information, prepare (as far as the data permit) monthly income statements in columnar form for February, March, and April. The inventory is to be shown in the statement at cost, the gain or loss due to market fluctuations is to be shown separately, and a valuation account is to be set up for the difference between cost and the lower-of-cost-or-market.

(b) Prepare the journal entry required to establish the valuation account at January 31 and entries to adjust it monthly thereafter.