At the beginning of October, Bowser Co.'s inventory consists of 61 units with a cost per unit of $39. The following transactions occur during the month of October October 4 Purchase 119 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, $728. October 9 Return 15 defective units from the October 4 purchase and receive credit. October 12 Pay Waluigi Co. in full. October 15 Sell 149 units of inventory to customers on account, $11,920. (Hint: The cost of units sold from the October 4 purchase includes $50 unit cost plus $7 per unit for freight less $1 per unit for the purchase discount, or $56 per unit.] October 19 Receive full payment from customers related to the sale on October 15. October 20 Purchase 89 units of inventory from Waluigi Co. for $59 per unit, terms 3/10, n/30. October 22 Sell 89 units of inventory to customers for cash, $7,120. (Note: For calculating the cost of inventory sold, ignore the possible purchase discount on October 20.) 3. 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. BOWSER CO Multiple-step Income Statement (partial) For the month of October Net Sales S 19,040 Cost of Goods Sold Gross Profit
At the beginning of October, Bowser Co.'s inventory consists of 61 units with a cost per unit of $39. The following transactions occur during the month of October October 4 Purchase 119 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, $728. October 9 Return 15 defective units from the October 4 purchase and receive credit. October 12 Pay Waluigi Co. in full. October 15 Sell 149 units of inventory to customers on account, $11,920. (Hint: The cost of units sold from the October 4 purchase includes $50 unit cost plus $7 per unit for freight less $1 per unit for the purchase discount, or $56 per unit.] October 19 Receive full payment from customers related to the sale on October 15. October 20 Purchase 89 units of inventory from Waluigi Co. for $59 per unit, terms 3/10, n/30. October 22 Sell 89 units of inventory to customers for cash, $7,120. (Note: For calculating the cost of inventory sold, ignore the possible purchase discount on October 20.) 3. 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. BOWSER CO Multiple-step Income Statement (partial) For the month of October Net Sales S 19,040 Cost of Goods Sold Gross Profit
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:At the beginning of October, Bowser Co.'s inventory consists of 61 units with a cost per unit of $39. The following
transactions occur during the month of October
October 4 Purchase 119 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, $728.
October 9 Return 15 defective units from the October 4 purchase and receive credit.
October 12 Pay Waluigi Co. in full.
October 15 Sell 149 units of inventory to customers on account, $11,920. (Hint: The cost of units sold from
the October 4 purchase includes $50 unit cost plus $7 per unit for freight less $1 per unit for
the purchase discount, or $56 per unit.)
October 19 Receive full payment from customers related to the sale on October 15.
October 20 Purchase 89 units of inventory from Waluigi Co. for $59 per unit, terms 3/10, n/30.
October 22 Sell 89 units of inventory to customers for cash, $7,120. (Note: For calculating the cost of
inventory sold, ignore the possible purchase discount on October 20.)
3. 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.
Net Sales
BOWSER CO.
Multiple-step Income Statement (partial)
Cost of Goods Sold
Gross Profit
For the month of October
$
19,040
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