Thompson Plumbing Inc. is a wholesaler of plumbing accessories. Thompson Plumbing began operations in September of the current year and engaged in the following transactions during September and October of this year. Thompson Plumbing uses a perpetual inventory system.

Instructions:

A. Compute the gross profit (loss) on Thompson Plumbing's transactions during September and October.

B. Compute the gross profit (loss) on Thompson Plumbing's transactions during September and October if a cash-basis accounting system was used.

D. Assume that the fair value of Thompson Plumbing's inventory at October 31 is $750,00. A potential lender asks Thompdon Plumbing to prepare a fair-value-based balance sheet. Prepare the journal entry to reflect inventory at fair-value. [Hint: Increase the Inventory account by the difference between fair value and book value with the offset to an account titled Revaluation of Inventory to Market Value.]

1. Record the entry to adjust inventory to fair market value