Arppel Company uses a periodic inventory system and closes its accounts annually on 31 December. Below are extracted from the books of the Company: Account balance as at 31 Dec 2020 Inventory $42,000 Account balance as at 31 Dec 2021 $440,000 $890,000 $22,000 Purchases Sales Sales Returns A complete physical inventory taken as at 31 December 2021 indicates goods costing $48,000 remains in stock. Required: (a) Compute (i) the cost of goods sold; (ii) gross profit; and (iii) the gross profit rate (in %) for the year 2021. Show workings. (b) Prepare two closing entries to create the Cost of Goods Sold account and update the Inventory асcount.

FINANCIAL ACCOUNTING
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ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Arppel Company uses a periodic inventory system and closes its accounts annually on 31
December. Below are extracted from the books of the Company:
Account balance as at 31 Dec 2020
Inventory
$42,000
Ассоunt balaаnce as at 31 Dec 2021
$440,000
$890,000
$22,000
Purchases
Sales
Sales Returns
A complete physical inventory taken as at 31 December 2021 indicates goods costing $48,000
remains in stock.
Required:
(a) Compute (i) the cost of goods sold; (ii) gross profit; and (iii) the gross profit rate (in %) for
the year 2021. Show workings.
(b) Prepare two closing entries to create the Cost of Goods Sold account and update the Inventorv
асcount.
Transcribed Image Text:Arppel Company uses a periodic inventory system and closes its accounts annually on 31 December. Below are extracted from the books of the Company: Account balance as at 31 Dec 2020 Inventory $42,000 Ассоunt balaаnce as at 31 Dec 2021 $440,000 $890,000 $22,000 Purchases Sales Sales Returns A complete physical inventory taken as at 31 December 2021 indicates goods costing $48,000 remains in stock. Required: (a) Compute (i) the cost of goods sold; (ii) gross profit; and (iii) the gross profit rate (in %) for the year 2021. Show workings. (b) Prepare two closing entries to create the Cost of Goods Sold account and update the Inventorv асcount.
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