Hardwood Lumber is a lumber yard block island. Some of Hardwood\'s transactions

Question

Hardwood Lumber is a lumber yard block island. Some of Hardwood's transactions during the current year are as follows: Mar. 3- Sold lumber on account to Delt Construction, $17,200. The inventory subsidiary ledger shows the cost of this merchandise was $11,150. Mar. 7- Purchased lumber on account from PHL Company, $4,100. Apr. 4- Collected in cash the $8,350 account receivable from Delt Construction. Apr. 10- Paid the $4,100 owed to PHL Company. Dec. 31- Hardwood's personnel counted the inventory on hand and determined its cost to be $105,000. The accounting records, however, indicate inventory of $106,500 and a cost of goods sold of $703,000. The physical count of the inventory was observed by the company's auditors and is considered correct. 1. Prepare journal entries to record these transactions and events in the accounting records of Hardwood Lumber. (The company uses a perpetual inventory system.) 2. Prepare a partial income statement showing the company's gross profit for the year. (Net sales for the year amount to $1,322,000.)

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