CASE STUDY: COUNTRY ROAD GIFT IDEAS. COUNTRY ROAD Gift Ideas began 2014 with 60,000 units of inventory that cost $36,000. During 2014, Country Road purchased merchandise on account for $352,500 as follows: Purchase 1 (100,000 units costing) $ 65,000 Purchase 2 (270,000 units costing) 175,500 Purchase 3 (160,000 units costing) 112,000 Cash payments on account totaled $326,000 during the year. COUNTRY ROAD sales during 2014 consisted of 520,000 units of inventory for $660,000, all on account. The company uses the FIFO inventory method. Cash collections from customers were $630,000. Operating expenses totaled $240,500, of which COUNTRY ROAD paid $211,000 in cash. COUNTRY ROAD accrued income tax expense at the rate 0f 35% of income before tax. REQUIREMENTS. 1. Make summary journal entries to record COUNTRY ROAD transactions for the year, assuming the company uses a perpetual inventory system. 2. Determine the FIFO cost of COUNTRY ROAD ending inventory at December, 31, 2014 in two ways: a. Use a T-account b. Multiply the number of units on hand by the unit cost 3. Show how COUNTRY ROAD would compute cost of goods sold for 2014. Follow the FIFO example earlier in the chapter. 4. Prepare COUNTRY ROAD income statement for 2014. Show totals for the gross profit and income before tax. 5. Determine COUNTRY ROAD gross profit percentage, rate of inventory turnover, and net income as a percentage of sales for the year. In COUNTRY ROAD industry, a gross profit percentage of 40%, an inventory turnover six times per year, and a net income percentage of 7% are considered excellent. How well does COUNTRY ROAD compare to the industry averages?