Ranns Supply uses a perpetual inventory system. On January 1, its inventory account had a begin-ning balance of $6,450,000. Ranns engaged in the following transactions during the year: 1. Purchased merchandise inventory for $9,500,000.2. Generated net sales of $26,000,000.3. Recorded inventory shrinkage of $10,000 after taking a physical inventory at year-end.4. Reported gross profit for the year of $15,000,000 in its income statement.a. At what amount was Cost of Goods Sold reported in the company’s year-end incomestatement?b. At what amount was Merchandise Inventory reported in the company’s year-end balancesheet? c. Immediately prior to recording inventory shrinkage at the end of the year, what was the bal-ance of the Cost of Goods Sold account? What was the balance of the Merchandise Inventory account?
Ranns Supply uses a perpetual inventory system. On January 1, its inventory account had a begin-
ning balance of $6,450,000. Ranns engaged in the following transactions during the year:
1. Purchased merchandise inventory for $9,500,000.
2. Generated net sales of $26,000,000.
3. Recorded inventory shrinkage of $10,000 after taking a physical inventory at year-end.
4. Reported gross profit for the year of $15,000,000 in its income statement.
a. At what amount was Cost of Goods Sold reported in the company’s year-end income
statement?
b. At what amount was Merchandise Inventory reported in the company’s year-end balance
sheet?
c. Immediately prior to recording inventory shrinkage at the end of the year, what was the bal-
ance of the Cost of Goods Sold account? What was the balance of the Merchandise Inventory
account?
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