A business purchases and sells PCs at an increase of 20% on cost. On 1 January 2020 the proprietor gives 3 PCs, with a stamped selling cost of 11200 each, to understudies. The business utilizes the perpetual recording system.

Which journal entry will be prepared by the business to record the exchange on 1 January 2020?

1. DR Donations cost 28000 CR PPE: Equipment 28000

2. DR Drawings 28000 CR Inventory 28000

3. DR Drawings 26880 CR Inventory 26880

4. DR Donations cost 28000 CR Inventory 28000

5. DR Donations cost 26880 CR Inventory 26880