Peter Company uses a periodic inventory system. Below is the extracted information from the unadjusted trial balance as at 31 December 2020 of the Company.

Peter Company uses a periodic inventory system. Below is the extracted information from the unadjusted trial balance as at 31 December 2020 of the Company. Credit $ Inventory, 31 December 2019 Purchases Sales Debit $ 100,000 350,500 1,000,000 A complete physical inventory taken as at 31 December 2020 indicates goods costing $30,000 remains in stock. Required: Prepare two closing entries to create the Cost of Goods Sold account and update the Inventory account. (5 marks) Part II (16 marks) Honey Company is a wholesaler of sports clothes. The Company uses a perpetual inventory method. Part II (16 marks) Honey Company is a wholesaler of sports clothes. The Company uses a perpetual inventory method. Required: Prepare the journal entries for the following transactions in May: 3 Purchased 2,000 pieces of sports clothes for $300 per piece from Tommy Company. The payment would be due on 18 May. 5 Returned 100 pieces of sports clothes to Tommy Company. 8 Sold 400 pieces of the sports clothes purchased on 3 May to Paul Ltd with gross profit rate of 40% for cash. 18 Paid to Tommy Company for the sports clothes purchased in May. 26 Paul Ltd returned 100 pieces of sports clothes purchased on 8 May to Honey Company because they are the wrong size. 31 An inventory taking on 31 May reflected that $2,000 inventories were damaged