Concept explainers
a)
Briefly describe the operating cycle of a merchandising company. Identify the assets and liabilities directly affected by this cycle.
b)
Prepare
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.
f)
Find the type of inventory system that Incorporation CPI would use most likely. Explain the same.
g)
Compute the gross profit margin on the January 6 sales transaction.
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