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Question \#2 Recording Inventory and applying FIFO The Company sells only one product. The company uses the FIFO cost flow assumption for both its books and its external reporting. The records all sales and purchases using the gross method. Information related to sales and purchases of its one product in the current month are presented below. All sales are on account, 3/10,n/30. All purchases are from a company whose terms are 2/10,EOM. The Company and its customers take advantage of all possible discounts. Jan. 1 Inventory on hand 100 units @ \$5 each 4 Sold 80 units @ \$8 each 11 Purchased $150 units at $6 each 13 Sold 120 units @ \$8.75 each 20 Purchased 160@$7 each 27 Sold 100 units @ \$9 each REQUIRED: (a) Assume The Company uses the periodic system, prepare all necessary journal entries, including the end-of-the-month entry to record cost of goods sold and entries to pay for inventory and collect the receivables. A physical count of inventory indicates that the ending inventory for January is 110units (b) Compute Gross Profit using the periodic system (c) Assume The Company uses the perpetual system and that costs are computed at the time of each withdrawal, prepare all necessary journal entries. (d) Compute gross profit using the perpetual system

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