Problem

(Learning Objective 1: Show how to account for inventory transactions)

Metricalla, Inc., purchased inventory costing $120,000 and sold 70% of the goods for $165,000. All purchases and sales were on account. Metricalla later collected 35% of the accounts receivable.

1. Journalize these transactions for Metricalla, which uses the perpetual inventory system.

2. For these transactions, show what Metricalla will report for inventory, revenues, and expenses on its financial statements at the end of the month. Report gross profit on the appropriate statement.