Fun Buy purchases inventory in crates of merchandise; each crate of inventory is a unit. The fiscal year of Fun Buy ends each June 30. Assume you are dealing with a single Fun Buy store in Nashville, Tennessee. The Nashville store began 2012 with an inventory of 23,000 units that cost a total of $1,150,000. During the year, the store purchased merchandise on account as follows:
August (28,000 units at $54)................................. $1,512,000
March (48,000 units at $58) ................................. 2,784,000
May (58,000 units at $64) .................................... 3,712,000
Total purchases ...................................................... $8,008,000

Cash payments on account totaled $7,608,000. During fiscal 2012, the store sold 153,000 units of merchandise for $14,688,000, of which $5,400,000 was for cash and the balance was on account. Fun Buy uses the average-cost method for inventories. Operating expenses for the year were $3,500,000. Fun Buy paid 50% in cash and accrued the rest as accrued liabilities. The store accrued income tax at the rate of 35%.

Requirements
1. Make summary journal entries to record the store’s transactions for the year ended June 30, 2012. Fun Buy uses a perpetual inventory system.
2. Prepare a T-account to show the activity in the Inventory account.
3. Prepare the store’s income statement for the year ended June 30, 2012. Show totals for gross profit, income before tax, and net income.