CPI sells computer peripherals. At December 31, year 1, CPI's inventory amounted to $700,000. During the first week in January, year 2, the company made only one purchase and one sale. These transactions were as follows. Jan.2 Purchaned 20 modema and 80 printers from Sharp. The total cost of these machines wan $45,000, terma 3/10, n/60. Jan.6 sold 30 different types of products on account to Pace Corporation. The total sales pride was $30,000, terms 5/10, n/90. The total cost of these 30 unita to CPI was $14,700 (net of the purchase discount). CPI has a full-time accountant and a computer-based accounting system. It records sales at the gross sales price and purchases at net cost and maintains subsidiary ledgers for accounts receivable, inventory, and accounts payable. Required: b. Prepare journal entries to record these transactions, assuming that CPI uses a perpetual inventory system. c. Compute the balance in the Inventory account at the close of business on January 6. d. Prepare journal entries to record the two transactions, assuming that CPI uses a periodic inventory system.

CPI sells computer peripherals. At December 31, year 1, CPI's inventory amounted to $700,000. During the first week in January, year 2, the company made only one purchase and one sale. These transactions were as follows. Jan.2 Purchaned 20 modema and 80 printers from Sharp. The total cost of these machines wan $45,000, terma 3/10, n/60. Jan.6 sold 30 different types of products on account to Pace Corporation. The total sales pride was $30,000, terms 5/10, n/90. The total cost of these 30 unita to CPI was $14,700 (net of the purchase discount). CPI has a full-time accountant and a computer-based accounting system. It records sales at the gross sales price and purchases at net cost and maintains subsidiary ledgers for accounts receivable, inventory, and accounts payable. Required: b. Prepare journal entries to record these transactions, assuming that CPI uses a perpetual inventory system. c. Compute the balance in the Inventory account at the close of business on January 6. d. Prepare journal entries to record the two transactions, assuming that CPI uses a periodic inventory system.

Name: CPI sells computer peripherals. At December 31, year 1, CPI's invento
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Description: CPI sells computer peripherals. At December 31, year 1, CPI's inventory amounted to $700,000. During the first week in January,year 2, the company made only one purchase and one sale. These transactions were as follows.Jan.2 Purchaned 20 modema and

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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Concept explainers

Inventory Valuation

Before discussing the topic inventory valuation let’s discuss the meaning of inventory. In accounting, inventory is also known as stock. Inventory means all the finished goods, materials, merchandise that a business holds for the purpose of selling it in the market with the motive of earning profit.

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CPI sells computer peripherals. At December 31, year 1, CPI's inventory amounted to $700,000. During the first week in January,
year 2, the company made only one purchase and one sale. These transactions were as follows.
Jan.2 Purchaned 20 modema and 80 printers from Sharp. The total cost of these machines wan $45,000, terma 3/10,
n/60.
Jan.6 Sold 30 different types of produets on aceount to Pace Corporation. The total sales pride was $30,000, terms
5/10, n/90. The total cost of these 30 units to CPI was $14,700 (net of the purchase discount).
CPI has a full-time accountant and a computer-based accounting system. It records sales at the gross sales price and purchases
at net cost and maintains subsidiary ledgers for accounts receivable, inventory, and accounts payable.
Required:
b. Prepare journal entries to record these transactions, assuming that CPI uses a perpetual inventory system.
c. Compute the balance in the Inventory account at the close of business on January 6.
d. Prepare journal entries to record the two transactions, assuming that CPI uses a periodic inventory system.
e. Compute the cost of goods sold for the first week of January assuming use of the periodic system. (Use your answer to part C
as the ending inventory.)
g. Compute the gross profit margin on the January 6 sales transaction.

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