At the beginning of October, Bowser Company's inventory consists of 68 units with a cost per unit of $32. The following transactions occur during the month of October. October 4 Purchase 112 units ofInventory 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, $552. October 9 Return 20 defective units fromthe October 4 purchase and receipt of credit. October 12 Pay Waluigi Company in full. October 15 Sell 142 units of inventory to customers on account, $11,360. (Hint: The cost of units sold from theOctober 4 purchase includes $50 unit cost plus $6 per unit for freight less $1 per unit for the purchase discount, or $55 per unit.) October 19 Receive full payment from customers related to the sale onOctober 15. October 20 Purchase 82 units of inventory from Waluigi Company for $52 per unit. October 22 Sell 82 units of inventory to customers for cash, $6,560. Required: 1. Assuming that BowserCompany 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 netrealizable 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 forthe month of October after the adjusting entry for lower of cost and net realizable value.

The journal entries are prepared to record the transactions on regular basis.The FIFO stands for…

October 15. October 20 Purchase 82 units of inventory from Waluigi Company for $52 per unit. October 22 Sell 82 units of inventory to customers for cash, $6,560. 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.

October 15. October 20 Purchase 82 units of inventory from Waluigi Company for $52 per unit. October 22 Sell 82 units of inventory to customers for cash, $6,560. 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.

Financial And Managerial Accounting

15th Edition

ISBN:9781337902663

Author:WARREN, Carl S.

Publisher:WARREN, Carl S.

Chapter5: Accounting For Retail Businesses

Section: Chapter Questions

Problem 41E: Cost of goods sold and related items The following data were extracted from the accounting records...

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