Record merchandising transactions, prepare financial statements, and calculate gross profit ratio: perpetual inventory system. (LO 1, 2, 4, 6)

At the beginning of April, Morgan Parts Company Inc. started with a contribution of \(\$ 20,000\) cash in exchange for common stock from its shareholders. The company engaged in the following transactions during the month of April.

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a. Enter each transaction into the accounting equation, assuming Morgan Parts Company Inc. uses a perpetual inventory system. Start with the opening balances in cash and common stock described at the beginning of the problem.

b. Calculate the balance in the inventory account at the end of April.

c. Prepare the four financial statements (including multiple-step income statement) for the month of April. (Balance sheet at April 30.)

d. Calculate the gross profit ratio.

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April 3 April 4 April 7 April 8 April 10 April 15 April 16 April 17 April 19 April 20 Purchased merchandise on account from Thompson Supply Co. for $5,000, terms 1/10, n/30 Sold merchandise on account to Brown Company for $3,500, terms 2/10, n/30. The cost of the merchandise sold was $1.500. Paid $100 freight on the sale to Brown Company Received credit from Thompson Supply Co. for merchandise returned for $500 Paid Thompson Supply Co. in full Received payment from Brown Company for sale made on April 4 Purchased merchandise for cash for $3,200 Received refund from supplier for returned merchandise on April 16 cash purchase of $350 Purchased merchandise on account from Kelsey Distributors for $4,100, terms 2/10, n/30 Paid $350 freight on April 19 purchase