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Pearl Company sells one product. Presented below is information for January for Pearl Company. Jan. 1...

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Accounting

Pearl Company sells one product. Presented below is informationfor January for Pearl Company. Jan. 1 Inventory 105 units at $4each 4 Sale 83 units at $8 each 11 Purchase 162 units at $7 each 13Sale 132 units at $9 each 20 Purchase 160 units at $7 each 27 Sale97 units at $10 each Pearl uses the FIFO cost flow assumption. Allpurchases and sales are on account.

a. Assume Pearl uses a perpetual system. Prepare all necessaryjournal entries. (If no entry is required, select "No entry" forthe account titles and enter 0 for the amounts. Credit accounttitles are automatically indented when amount is entered. Do notindent manually.)

b. Compute gross profit using the perpetual system.

Gross profit= $

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Journal entry

Date account and explanation debit credit
Jan 4 Account receivable (83*8) 664
    Sales revenue) 664
(To record purchase)
Cost of goods sold (83*4) 332
    Merchandise inventory 332
(To record cost of goods sold)
Jan 11 Merchandise inventory (162*7) 1134
    Account payable 1134
(To record purchase)
Jan 13 Account receivable (132*9) 1188
    Sales revenue 1188
(To record sales)
Cost of goods sold 946
   Merchandise inventory 946
(To record cost of goods sold)
Jan 20 Merchandise inventory (160*7) 1120
    Account payable 1120
(To record purchase)
Jan 27 Account receivable 970
   Sales revenue 970
(To record sales)
Cost of goods sold (52*7+45*7) 679
Merchandise inventory 679
(To record cost of goods sold)

Sales = 2822

Cost of goods sold =1957

Gross profit = 2822-1957 = 865
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