Question

I During the first week in January, year 2, the company made only one purchase and one sale transactions were as follows. . CPI sells computer peripherals. At December 31, year 1, CPI's inventory amounted to 2 Purchased 20 modems and 80 printers from Sharp. The total cost of these machines was $325m terms 3/10, n/60. 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) Jan. 6 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 recai able, inventory, and accounts payable. Instructions a. Briefly describe the operating cycle of a merchandising company. Identify the assets and li- bilities directly affected by this cycle. b. Prepare journal entries to record these transactions, assuming that CPI uses a perpetual inver tory system. Compute the balance in the Inventory account at the close of business on January 6. Prepare journal inventory system c. d. Pepare jounal enries to record the two transactions, assuming th d. e. Compute the cost of goods sold for the first week of January assuming use of the pe f. Which type of inventory system do you think CPI most likely would use? B g. Compute the gross profit margin on the January 6 sales transaction. entries to record the two transactions, assuming that CPI uses a perid system. (Use your answer to part e as the ending inventory.) Explain y reasoning.

Answer 1