Question

At the beginning of October, Bowser Co.’s inventory consists of 59 units with a cost per unit of $41. The following transactions occur during the month of October

October 4 Purchase 121 units of inventory on account from Waluigi Co. for $50 per unit, terms 2/10, n/30.

October 5 Pay cash for freight charges related to the October 4 purchase, $530.

October 9 Return 15 defective units from the October 4 purchase and receive credit.

October 12 Pay Waluigi Co. in full.

October 15 Sell 151 units of inventory to customers on account, $12,080. [ 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 91 units of inventory from Waluigi Co. for $61 per unit, terms 2/10, n/30.

October 22 Sell 91 units of inventory to customers for cash, $7,280.

Suppose by the end of October that the remaining inventory is estimated to have a net realizable value per unit of $35. Record any necessary adjustment for lower of cost and net realizable value.

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

Answer 1

I showed the net ending inventory as 490 , the adjustment to the stock value is 230. I hope this will help you.