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Claypool Hardware is the only hardware store in a remote area of northern Minnesota. Some of Claypools transactions during the current year are as follows: November 5 Sold lumber on account to Bemidji Construction, $14,890. The inventory subsidiary ledger shows the cost of this merchandise was $10,035. November 9 Purchased tools to be resold on account from Owatonna Tool Company, $4,100. December 5 Collected in cash the $14,890 account receivable from Bemidji Construction. December 9 Paid the $4,100 owed to Owatonna Tool Company. December 31 Claypools personnel counted the inventory on hand and determined its cost to be $182,800. The accounting records, however, indicate inventory of $184,690 and a cost of goods sold of $672,035. The physical count of the inventory was observed by the companys auditors and is considered correct. Assume that an index of key business ratios in your library shows hardware stores of Claypools approximate size (in total assets) average net sales of $1 million per year and a gross profit margin of 28 percent. Required: Prepare journal entries to record these transactions and events in the accounting records of Claypool Hardware. (Hint: For the December 31 entry, record any discrepancy between the recorded amount and the amount from the physical account by increasing or decreasing inventory with an offsetting adjustment to cost of goods sold.) Prepare a partial income statement showing the companys gross profit for the year. (Net sales for the year amount to $1,033,900.) Claypool purchases merchandise inventory at the same wholesale prices as other hardware stores. Due to its remote location, however, the company must pay between $21,000 and $26,000 per year in extra transportation charges to receive delivery of merchandise. (These additional charges are included in the amount shown as cost of goods sold.) Does the business appear to suffer or benefit financially from its remote location?