PROBLEM 6.8A: CPI sells computer peripherals. At December 31, 2011, CPI's inventory amounted to $500,000. During the first week in January 2012, the company made only one purchase and one sale. These transactions were as follows: Jan. 2 Purchased 20 modems and 80 printers from Sharp. The total cost of these machines was $25,000, terms 3/10, n/60. Jan. 6 Sold 30 different types of products on account to Pace Corporation. The total sales price was $10,000, terms 5/10, n/90. The total cost of these 30 units to CPI was $6,100 (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.

PROBLEM 6.8A: CPI sells computer peripherals. At December 31, 2011, CPI's inventory amounted to $500,000. During the first week in January 2012, the company made only one purchase and one sale. These transactions were as follows: Jan. 2 Purchased 20 modems and 80 printers from Sharp. The total cost of these machines was $25,000, terms 3/10, n/60. Jan. 6 Sold 30 different types of products on account to Pace Corporation. The total sales price was $10,000, terms 5/10, n/90. The total cost of these 30 units to CPI was $6,100 (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.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

PROBLEM 6.8A:
CPI sells computer peripherals. At December 31, 2011, CPI's inventory amounted to $500,000. During the first
week in January 2012, the company made only one purchase and one sale. These transactions were as follows:
Jan. 2 Purchased 20 modems and 80 printers from Sharp. The total cost of these machines was $25,000,
terms 3/10, n/60.
Jan. 6 Sold 30 different types of products on account to Pace Corporation. The total sales price was $10,000,
terms 5/10, n/90. The total cost of these 30 units to CPI was $6,100 (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.
Instructions
a. Briefly describe the operating cycle of a merchandising company
b. Prepare journal entries to record these transactions, assuming that CPI uses a perpetual inventory
system.
c. Compute the gross profit margin on the January 6 sales transaction.

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