Determine the amount of inventory that was purchased

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Question - Penno Company reported ending inventories of $23,560,000 in 2011 and $25,790,000 in 2010. Cost of goods sold totaled $142,790,000 in 2011.

(a) Prepare the journal entry to record cost of goods sold.

(b) Set up a T-account for inventory and post the cost of goods sold entry for part (a) to this account.

(c) Using the T-account from (b) determine the amount of inventory that was purchased in 2011. Prepare a journal entry to record those purchases.

(d) Using the financial statement effects template, show the effects of the entries in parts (a.) and (c.) on the balance sheet and income statement.

Reference no: EM131872506

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