Recording Purchases and Sales

Cabral Office Products sells computer printers and printer supplies. One of its products is a toner cartridge for laser printers. At the beginning of 2013, there were 200 cartridges on hand at a cost of $60 each. During 2013, Cabral Office Products purchased 1,400 cartridges at $60 each. After inspection, Cabral determined that 10 cartridges were defective and returned them to the supplier. Cabral also sold 800 cartridges at $97 each and sold an additional 750 cartridges at $102 each after a midyear selling price increase. Customers returned 15 of the cartridges that were purchased at $102 to Cabral for miscellaneous reasons. Assume that Cabral Office Products uses a perpetual inventory system.

Required:

1. Prepare summary journal entries to record the purchases, sales, and return of inventory. Assume that all purchases and sales are on credit but no discounts were offered. Make journal entries in the order that transactions are presented above.

1) Record the entry for the purchases during the year.

(Purchased inventory on account)

2) Record the entry for the return, by adding machine supply, of the cartridges to its supplier.

(Recorded return of defective cartridges sold)

3)Record the entry for the sales during the year.

(Sold inventory on account)

4)Record the entry for the cost of goods sold related to the sales during the year.

(Recorded cost of inventory sold)

5)Record the entry for the return, by customers, of the cartridges to adding machine supply.

(Recorded return of defective cartridges)

6) (Recorded return of defective cartridges)

2. What is the cost of ending inventory, cost of goods sold, and gross profit for 2013?

Cost of ending inventory	$
Cost of goods sold	$
Gross profit