Cost Accumulation: Merchandising:

Pasta to Go is a fast food outlet that caters to busy professionals who don't have time to cook dinner every night. It prepares various styles of pasta dishes that can be picked up and heated at home. It experienced the following events during the current year (all transactions were on account):

1. Incurred marketing costs of $98,500.

2. Purchased $485,500 of merchandise.

3. Paid $13,000 for transportation-in costs.

4. Incurred $200,000 in administrative costs.

5. Took a periodic inventory on December 31 and learned that goods with a cost of $148,500 were on hand. This compared with a beginning inventory of $157,000 on January 1.

6. Sales revenue during the year was $925,000.

Required:

a. Prepare appropriate journal entries to record these transactions.

b. Prepare an income statement based on the data.