Arppel Company uses a periodic inventory system and closes its accounts annually on 31 December. Below...

  

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Arppel Company uses a periodic inventory system and closes its accounts annually on 31 December. Below are extracted from the books of the Company: Account balance as at 31 Dec 2020 Inventory $42,000 Account balance as at 31 Dec 2021 Purchases $440,000 Sales $890,000 Sales Returns $22,000 A complete physical inventory taken as at 31 December 2021 indicates goods costing $48,000 remains in stock. Required: (a) Compute (i) the cost of goods sold; (ii) gross profit; and (iii) the gross profit rate (in %) for the year 2021. Show workings. (6 marks) (b) Prepare two closing entries to create the Cost of Goods Sold account and update the Inventory (5 marks) account. Arppel Company uses a periodic inventory system and closes its accounts annually on 31 December. Below are extracted from the books of the Company: Account balance as at 31 Dec 2020 Inventory $42,000 Account balance as at 31 Dec 2021 Purchases $440,000 Sales $890,000 Sales Returns $22,000 A complete physical inventory taken as at 31 December 2021 indicates goods costing $48,000 remains in stock. Required: (a) Compute (i) the cost of goods sold; (ii) gross profit; and (iii) the gross profit rate (in %) for the year 2021. Show workings. (6 marks) (b) Prepare two closing entries to create the Cost of Goods Sold account and update the Inventory (5 marks) account.