Retail Ventures uses the perpetual inventory system and is preparing its financial statements for the year ending December 31, 20X1. The company had the following transactions:

• January 5: Purchased 1,000 units of merchandise at $20 per unit.
• April 10: Sold 800 units of merchandise at $35 per unit.
• July 15: Purchased 500 units of merchandise at $25 per unit.
• October 20: Sold 400 units of merchandise at $40 per unit.

Required:

1. Calculate the cost of goods sold (COGS) and ending inventory using the FIFO method.
2. Prepare the journal entries for the inventory purchases and sales.
3. Calculate the gross profit for the year.
4. Discuss the impact of the perpetual inventory system on the company’s financial reporting and inventory management.