Part I (16 marks)

Yvonne Ltd. uses a periodic inventory system. At the end of 2016, the accounting records include the following information:

Inventory, 31 December 2015	$22,000
Inventory, 31 December 2016	$16,000
Purchases	$160,000
Net sales	$200,000

Required:

(a) Compute (i) the cost of goods sold; and (ii) gross profit for the year of 2016.

Show your workings. (6 marks)

(b)	Prepare two closing entries to create the Cost of Goods Sold account and update the Inventory account. (10 marks)

Part II (12 marks)

Eva Ltd. uses a perpetual inventory method. Prepare the journal entries for the following transactions:

1 June	Paid $200 owed to Sis Company.
3	Purchased goods from North Company for $900 on account.
4	Returned $80 of the goods to North Company.
17	Paid the amount owed to North Company.
20	Sold all the goods on hand from North Company with gross profit rate of 20%. The payment will be made within 30 days.