The Snow-Be-Gone Company sells one type of snowblower and uses the perpetual inventory system. At the beginning of January, the company had a balance in its Cash account of $2,100 and an inventory of 8 units (snowblowers) costing $100 each. During January, it made the following purchases and sales of inventory:

Jan. 5 Purchases 5 units @ $102 per unit 12 Sales 11 units @ $150 per unit 18 Purchases 12 units @ $104 per unit 25 Purchases 6 units @ $103 per unit 29 Sales 13 units @ $150 per unit All purchases and sales were for cash. The company uses “bar codes” to verify each sale.

For the sales on January 12,8 were units from the beginning inventory, and 3 were units purchased on January 5. For the sales on January 29, 9 were units purchased on January 18, and 4 were units purchased on January 25.

Required: (1) Record the beginning balances in the Cash and Inventory T-accounts. Using T-accounts, record the purchases and sales transactions during January and compute the ending balances of all the accounts you used.

(2) Assume that the company counted its inventory at the end of January and determined that it had 7 snowblowers on hand. Prove that the ending balance in the Inventory account that you computed in (1) is correct.

(3) Compute the company’s gross profit.  TK-1