Reference no: EM132441323
Alexandar Inc deals in the state of the art telescope to individual and organizations interested in studying the solar system. At December 31 last year ,the company's inventory amounted$150,000. During the first week of january this year ,the company made only one purchase and one sale. These transactions were as follow:
Jan 2:Sold one telescope costing $50,000 to central state university for cash $77,000.
Jan 5: Purchased merchandise on account form lunar optics, $50,000.Terms, 4/10,n/30.
a) Prepare journal report to record these transactions assuming that sky Probe uses the perpetual inventory system.Use separate entries to record the sales revenue and the cost of goods sold for the sale on January 2.
b) Compute the balance of the inventory account on january 2.
c) Prepare journal entries to record the two transactions, assuming that Sky probe uses the periodic inventory system.
d) Compute the cost of goods sold for the first week of January assuming use of a periodic inventory system. Use your answer to part b as the ending inventory.
e) Which inventory system do you believe that a company such as a Sky probe would probably use?Explain your reasoning.
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