James Stores, Inc. completed the following transactions during the current year, the company’s first year of operations. James Stores has a December 31 year- end.
1. January 16: Purchased $ 546,000 of merchandise inventory from various suppliers on account (no discount for early payment offered).
2. February 1: Sold merchandise that cost $ 100,000 for $ 120,500 on account. The sales tax rate is 8%.
3. February 10: Paid half of the January 16 purchases.
4. February 16: Paid the remaining balance of accounts payable from the January 16 purchase.
5. March 1: Paid the sales taxes recorded on February 1.
6. June 1: Sold merchandise that cost $ 212,000 for $ 300,000 on account. The sales tax rate is 8%.
Required
a. Prepare the journal entries required to record the transactions listed above. Assume a perpetual inventory system is used.
b. Prepare a partial income statement for the current fiscal year.