The Bugs-Be-Gone Company sells two types of screen doors. Model A, which sells for $30, is the basic screen door, and Model B, which sells for $50, is the deluxe screen door that features removable glass panels so that it can be turned into a storm door during the winter, At the beginning of July, the company had a balance in its Cash account of $1,600 and an inventory consisting of 12 units of Model A costing $20 each and 15 units of Model B costing $35 each. During July, it made the following purchases and sales of inventory:

Model A Model B July 6 Sales 8 units @ $30 each 10 units @ $50 each 13 Purchases 9 units @ $19 each 10 units @ $36 each 20 Sales 10 units @ $30 each 12 units @ $50 each 24 Purchases 7 units @ $21 each 6 units @ $37 each 29 Sales 7 units @ $30 each 3 units @ $50 each All purchases and sales are for cash. The company has a perpetual inventory system, using “bar codes” to verify each sale. For the sales on July 20,3 units of Model A were from the beginning inventory, and 7 were units purchased on July 13;5 units of Model B were from the beginning inventory, and 7 were units purchased on July 13. For the sales on July 29, | unit of Model A was purchased on July 13, and 6 were units purchased on July 24;
| unit of Model B was purchased on July 13, and 2 were units purchased on July 24.
On July 31, the company counted its inventory and determined that it had 3 units of Model A and 6 units of Model B on hand. However, | of the 3 units of Model A was run over by a customer's truck and had to be thrown away. This unit had been in the beginning inventory.
Required: (1) Record the beginning balances in the Cash and Inventory T-accounts. Using T-accounts (use one account for inventory), record the purchases and sales transactions during July and compute the ending balances of all the accounts you used.
(2) Record the disposal of the damaged unit and prove the accuracy of the ending balance in the Inventory account.
(3) Compute the gross profit percentage. How was this affected by the damaged inventory?
(4) Do you think your work would have been easier if you had used two inventory accounts in (1)? How do you think a company with many items of inventory keeps track of these items under a perpetual inventory system?  TK-1