Cabral Office Products sells computer printers and printer supplies. One of its products is a toner cartridge for laser printers. At the beginning of the year, there were 200 cartridges on hand that cost $60 each. During the year, Cabral purchased 1,400 cartridges at $60 each. After inspection, Cabral determined that 10 cartridges were defective and returned them to the supplier. Cabral also sold 800 cartridges at $89 each and sold an additional 750 cartridges at $102 each after a midyear selling price increase. Customers returned 15 of the cartridges that were purchased at $102 to Cabral for miscellaneous reasons. Assume that Cabral uses a perpetual inventory system.

Required:

1. Prepare summary journal entries to record the purchases, sales, and return of inventory. Assume that all purchases and sales are on credit but no discounts were offered. Make journal entries in the order that transactions are presented above.

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Record the entry for the purchases during the year. If an amount box does not require an entry, leave it blank.

	Accounts PayableAccounts ReceivableCashCost of Goods SoldInventoryInventory	Inventory	Inventory
	Accounts PayableAccounts ReceivableCashCost of Goods SoldInventoryAccounts Payable	Accounts Payable	Accounts Payable

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In each transaction, consider whether the company is the buyer or the seller. From the buyer's perspective, the historical cost principle implies that inventory cost will include the purchase price of the inventory plus any cost of bringing the goods to a salable condition and location. From the sellers perspective, the sale or return of inventory requires two journal entries one to record the revenue portion of the transaction and one to record the expense (and inventory) portion of the transaction.

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Record the entry for the return, by Cabral Office Products, of the cartridges to its supplier. If an amount box does not require an entry, leave it blank.

	Accounts PayableAccounts ReceivableInventorySales Returns and AllowancesSales Revenue	- Select -	- Select -
	Accounts PayableAccounts ReceivableInventorySales Returns and AllowancesSales Revenue	- Select -	- Select -

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In each transaction, consider whether the company is the buyer or the seller. From the buyer's perspective, the historical cost principle implies that inventory cost will include the purchase price of the inventory plus any cost of bringing the goods to a salable condition and location. From the sellers perspective, the sale or return of inventory requires two journal entries one to record the revenue portion of the transaction and one to record the expense (and inventory) portion of the transaction.

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Record the entry for the sales during the year. If an amount box does not require an entry, leave it blank.

	Accounts PayableAccounts ReceivableCashSales Returns and AllowancesSales Revenue	- Select -	- Select -
	Accounts PayableAccounts ReceivableCashSales Returns and AllowancesSales Revenue	- Select -	- Select -

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In each transaction, consider whether the company is the buyer or the seller. From the buyer's perspective, the historical cost principle implies that inventory cost will include the purchase price of the inventory plus any cost of bringing the goods to a salable condition and location. From the sellers perspective, the sale or return of inventory requires two journal entries one to record the revenue portion of the transaction and one to record the expense (and inventory) portion of the transaction.

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Record the entry for the cost of goods sold related to the sales during the year. If an amount box does not require an entry, leave it blank.

	Accounts PayableAccounts ReceivableCashCost of Goods SoldInventory	- Select -	- Select -
	Accounts PayableAccounts ReceivableCashCost of Goods SoldInventory	- Select -	- Select -

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In each transaction, consider whether the company is the buyer or the seller. From the buyer's perspective, the historical cost principle implies that inventory cost will include the purchase price of the inventory plus any cost of bringing the goods to a salable condition and location. From the sellers perspective, the sale or return of inventory requires two journal entries one to record the revenue portion of the transaction and one to record the expense (and inventory) portion of the transaction.

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Record the entry for the return, by customers, of the cartridges to Cabral Office Products. If an amount box does not require an entry, leave it blank.

	Accounts PayableAccounts ReceivableCost of Goods SoldSales Returns and AllowancesSales Revenue	- Select -	- Select -
	Accounts PayableAccounts ReceivableInventorySales Returns and AllowancesSales Revenue	- Select -	- Select -
	(Recorded the sales return of defective cartridges)
	Accounts PayableAccounts ReceivableCashCost of Goods SoldInventory	- Select -	- Select -
	Accounts PayableCashCost of Goods SoldInventorySales Returns and Allowances	- Select -	- Select -
	(Recorded the inventory returned of defective cartridges)

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In each transaction, consider whether the company is the buyer or the seller. From the buyer's perspective, the historical cost principle implies that inventory cost will include the purchase price of the inventory plus any cost of bringing the goods to a salable condition and location. From the sellers perspective, the sale or return of inventory requires two journal entries one to record the revenue portion of the transaction and one to record the expense (and inventory) portion of the transaction.

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2. What is the cost of ending inventory, cost of goods sold, and gross profit for the year?

Cost of ending inventory	$fill in the blank 59a782044fa6079_1
Cost of goods sold	$fill in the blank 59a782044fa6079_2
Gross profit	$fill in the blank 59a782044fa6079_3

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The balance in the inventory account reflects the cost of the ending inventory.

Cost of goods sold can be determined with reference to the previously made journal entries. Cost of goods sold also reflects the units sold, the price per unit, and if necessary, an adjustment for the cost of any units returned.

Gross profit is a function of Sales and Cost of goods sold.

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Partially correct