Presented below is information related to Candlebox Enterprises.

Instructions
(a) From the information, prepare (as far as the data permit) monthly income statements in columnar form for February, March, and April. The inventory is to be shown in the statement at cost, the gain or loss due to market fluctuations is to be shown separately, and a valuation account is to be set up for the difference between cost and the lower of cost or market.
(b) Prepare the journal entry required to establish the valuation account at January 31 and entries to adjust it monthlythereafter.

Jan. 31 $15.000 14,500 Feb. 28 $15,100 12,600 20,000 29,000 Mar. 31 $17,000 15,600 24,000 35,000 Apr. 30 $13,000 12,300 26,500 40,000 Inventory at cost Purchases for the month Sales revenue for the month