Use the data in exercise 5-11 to do the following for Capital Technologies Inc.:

1. Post to the Inventory and Cost of Goods Sold accounts.

2. Compute cost of goods sold using the example given in Exhibit 5-4, Panel B.

3. Prepare the December 2020 income statement of Capital Technologies Inc. through gross profit.

Exercise 5-11

Capital Technologies Inc. began 2020 with inventory of \(\$ 20,00(0)\). During the year. Capital purchased inventory costing \(\$ 100,00(\) and sold goods for \(\$ 1+0,000\), with all transactions on account. Capital ended the year with inventory of \(\$ 30,000\). Journalize all the necessary transactions under the periodic inventory system.

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EXHIBIT 5-4 Recording and Reporting Inventory-Perpetual System and Periodic System (Amounts Assumed) A 1 B Perpetual System CD A B D Periodic System 2 PANEL A-Recording Transactions 2 3 Jan. 2 Inventory 600,000 4 Accounts payable 600,000 5 Purchased 1,000 units on account 67 3 Inventory 4,000 Accounts payable 4,000 8 Record freight fee on purchases. 9 9 Accounts payable 25,000 10 Inventory 25,000 11 Returned goods to supplier for credit 12 11 Accounts payable 5,000 13 Inventory 5,000 14 Record purchase allowance. 15 16 Accounts payable 14,000 16 Inventory 14,000 17 Record purchase discount. 18 16 Accounts payable 560,000 19 Cash 560,000 20 Record payment 21 31 Accounts receivable 900,000 22 Sales revenue 900,000 23 Record sales on account. 24 31 Cost of goods sold 540.000 25 Inventory 540,000 26 Update inventory and COGS 27 31 No adjustments required.. 28 29 3456782U 23ALLTE222222222222 PANEL A-Recording Transactions (all amounts are assumed) Jan. 2 Purchases 600,000 Accounts payable 600,000 Purchased 1,000 units on account 3 Freight-in 4,000 Accounts payable 4,000 Record freight fee on purchases. 9 9 Accounts payable 25,000 10 Purchase returns 25,000 11 12 Returned goods to supplier for credit. 11 Accounts payable 5,000 13 Purchase allowance 5,000 14 Record purchase allowance. 15 16 Accounts payable 14,000 16 Purchase discount 14,000 17 Record purchase discount. 18 16 Accounts payable 560,000 19 Cash 560,000 20 Record payment. 21 31 Accounts receivable 900,000 Sales revenue 900,000 Record sales on account 24 31 No entry. 25 26 27 31 Cost of goods sold 540,000 28 Inventory, ending balance 120,000 29 Purchase allowance 5,000 30 30 Purchase returns 25,000