prepare journal entries perpetual inventory system partial income statement showing 419694

Clay pooll Hardwares is only hardware store in a remote area of northern Minnesota. Some of Claypools tranactions during the current year are as followed:

Nov 5th Sold Lumber on account to Bemmidji Construction for $13,390. The inventory subsidary ledger shows the cost of the this merchandise was $9,105.

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Nov 9th Purchased Tools on account from Owatonna Tool Company, $3,800.

Dec 5th Collected in cash the $13,390 account recivable from Bemidji Construction.

Dec 9th Paid the $3,800 owed to Owatonna Tool Company.

Claypools personnel counted the inventory on hand and determined its cost to be $182,080. The accounting records however, indicate inventory of 183,790 and a cost of goods sold of $695,222. The physcial count of inventory was observed by the company’s auditors and is considered correct. (Inventory Shrinkage).

A. Prepare joural entries to record theses transactions and events in the accounting records of Claypool Hardware. (The company uses a Perpetual inventory system).

B. Prepare a partial income statement showing the companies Gross profit for the year. (Net Sales for the year amount to $1,024,900.

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