Answer:
To solve this problem, we'll go through the transactions step by step using the FIFO perpetual inventory system.
1. Record the transactions:
October 4:
Inventory: 117 units * $50 = $5,850 (Debit)
Accounts Payable (Waluigi Company): $5,850 (Credit)
October 5:
Inventory: $485 (Debit)
Cash: $485 (Credit)
October 9:
Accounts Payable (Waluigi Company): $1,000 (Debit)
Inventory: $1,000 (Credit)
October 12:
Accounts Payable (Waluigi Company): $4,850 (Debit)
Cash: $4,850 (Credit)
October 15:
Accounts Receivable (Customers): $11,760 (Debit)
Sales Revenue: $11,760 (Credit)
Cost of Goods Sold: 147 units * $54 = $7,938 (Debit)
Inventory: $7,938 (Credit)
October 19:
Cash: $11,760 (Debit)
Accounts Receivable (Customers): $11,760 (Credit)
October 20:
Inventory: 87 units * $57 = $4,959 (Debit)
Accounts Payable (Waluigi Company): $4,959 (Credit)
October 22:
Cash: $6,960 (Debit)
Sales Revenue: $6,960 (Credit)
Cost of Goods Sold: 87 units * $54 = $4,698 (Debit)
Inventory: $4,698 (Credit)
2. Adjusting entry for lower of cost and net realizable value (LNRV):
October 31:
Inventory (LNRV adjustment): $17 * ($37 - $31) = $102 (Debit)
Cost of Goods Sold: $102 (Credit)
This entry reduces the value of the remaining inventory to its estimated net realizable value.
3. Prepare the top section of the income statement:
Now, let's prepare the top section of the multiple-step income statement through gross profit for the month of October after the LNRV adjustment.
Sales Revenue: $11,760 + $6,960 = $18,720
Cost of Goods Sold: $7,938 + $4,698 + $102 = $12,738
Gross Profit = Sales Revenue - Cost of Goods Sold
Gross Profit = $18,720 - $12,738 = $5,982
So, the gross profit for the month of October is $5,982.