Journalize the following transactions related to merchandising operations that occurred in August while paying attention to the credit terms:

Aug 1 - Purchased merchandise on account from ABC $1,500, FOB shipping point, terms n/30. The party paying the freight paid it in cash. Aug 3 - Received credit of $200 from ABC for merchandise with flaws that you decided to keep. Aug 5 - Sold merchandise on account to customers $500, terms 1/10,n/30. Cost of the items sold $250. Aug 9 - Paid ABC. Aug 25 - Granted credit of $200 to customers for merchandise returned with cost $100. Aug 26 - Received payments on account from customers $200. PART B (9.5 points)

ABC had a beginning inventory on January 1 of 150 units of Product X at a cost of $10 per unit.

During the year, the following purchases were made.

Purchase 1 - 300 units at $12 Purchase 2 - 450 units at $14 Purchase 3 - 150 units at $16 Purchase 4 - 100 units at $18 The Company uses a periodic inventory system and has 100 units on hand according to physical count.

Instructions

Determine the (1) units available for sale, (2) cost of goods available for sale for the year, (3) units sold. (1.5 points - 0.5 points each) Determine the cost of ending inventory using the Average Cost Method. (2 points) Determine the cost of goods sold using the Average Cost Method using the formula. (2 points) Prove the accuracy of the cost of goods sold computed above using the Average Cost Method. (2 points) Calculate the Gross Profit using the number of units sold calculated above and assuming that the goods were sold at $30 per unit. (2 points)