Problem 3 (20 points)

A company has the following transactions during March:

March 3 Purchases inventory on account for $3,500, terms 2/10, n/30. March 5 Pays freight costs of $200 on inventory purchased on March 3. March 6 Returns inventory with a cost of $500. March 12 Pays the full amount due on March 3 purchase.

March 29 Sells all inventory purchased on March 3 (less those returned on March 6) for $5,000 on account.

1. Record all transactions, assuming the company uses a perpetual inventory system.

2. Calculate gross profit for the month of March.