Problem 1 (25 points) Home Furniture Ltd. sells washing machines. At December 31, 2018, Home Furniture Ltd. inventory amounted to $250,000. During the first week of January 2018, the company made only one purchase and one sale. These transactions were as follows: Jan. 5Purchased 40 machines from Wash Experts. The total cost of these machines was $48,000 Discount terms 3/10, n/60. Sold The total cost of these 38 units to Norfolk was $30,800. machines on account to Home supply Ltd. The total sales price was $82,500. Jan. 12 Home Furniture Ltd. has a full-time accountant and a computer-based accounting system. Its records sales at the gross sales price and purchases at net cost and maintains subsidiary ledgers for accounts receivable, inventory, and accounts payable. Instructions Briefly describe the operating cycle of a merchandising company. Identify the assets and 1. liabilities directly affected by this cycle. (5 points) 2. Prepare journal entries to record these transactions, assuming Home Furniture Ltd. uses a perpetual inventory system. (5 points) Compute the balance in the Inventory control account at the close of business on January 12 (5 points)