You are given the following information for transactions by Schwinghamer Co. All transactions are settled in cash. Returns are normally not damaged and are restored immediately to inventory for resale. Schwinghamer uses a perpetual inventory system and the FIFO cost formula.

Instructions
(a) Prepare the required journal entries for the month of October for Schwinghamer Co.
(b) Determine the ending inventory for Schwinghamer.
(c) On October 31, Schwinghamer Co. determines that the product has a net realizable value of $10 per unit. What amount should the inventory be valued at on the October 31 balance sheet? Prepare any required journal entries.
(d) What amount should ending inventory be valued at on the October 31 balance sheet? What amount should cost of goods sold be valued at on the October income statement?
Taking It Further
What if Schwinghamer had used average instead of FIFO? How would this affect the October 31 ending inventory on the balance sheet compared with FIFO?

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Date Transaction Units Unit Price $14 13 20 20 12 12 16 Oct. 1 Beginning inventory Purchase Sale Sale return Purchase Purchase return Sale Purchase 110 (140) 25 35 10 15 16 20 (70) 15