Fundamentals of Financial Accounting 4th Edition by Fred Phillips,Robert Libby,Patricia Libby

Exercise 53

Recording Journal Entries for Purchases and Sales Using a Perpetual Inventory System
Inventory at the beginning of the year cost $13,400. During the year, the company purchased (on account) inventory costing $84,000. Inventory that had cost $80,000 was sold on account for $95,000. At the end of the year, inventory was counted and its cost was determined to be $17,400. ( a ) Show the cost of goods sold equation using these numbers. ( b ) What was the dollar amount of Gross Profit ( c ) Prepare journal entries to record these transactions, assuming a perpetual inventory system is used.