The following data pertain to Arrowhead Company for the year ended December 31, 2006:

Inventory purchases during the year ..................................$ 800,000

Sales during the year ..........................................................1,200,000

Cost of goods sold during the year .......................................750,000

Beginning inventory ..............................................................400,000

Ten percent of the inventory purchases were for cash. The remainder was on account.

Twenty percent of the sales were for cash. The remainders were on account.

a. Prepare journal entries to record sales, cost of goods sold, and the purchase of inventory, during 2006 using the perpetual inventory system.

b. Compute the balance in the Inventory account on December 31, 2006.