Claypool Hardware is the only hardware store in a remote area of northern Minnesota. Some of Claypool's transactions during the current year are as follows.

Nov. $5$ Sold lumber on account to Bemidji Construction, $$16,640.$ The inventory subsidiary ledger shows the cost of this merchandise was $$11,120.$

Nov. $9$ Purchased tools on account from Owatonna Tool Company, $$4,450.$

Dec. $9$ Collected in cash the $$16,640$ account receivable from Bemidji Construction.

Dec. $31$ Claypool the $$4,450$ owed to Owatonna Tool Company.

records, however, indicate inventory of $$185$ on hand and determined its cost to be $$183,640.$ The accounting inventory was observed by the company's auditors and is considered correct. $$699,748.$ The physical count of

Assume that an index of key business ratios in your library shows hardware st average net sales of $$1$ million per year and a gross profit margin of $26$ percent.

Required:

a$.$ Prepare journal entries to record these transactions and events in the accounting records of Claypool Hardware. $($The company uses a perpetual inventory system.$)$

b$.$ Prepare a partial income statement showing the company's gross profit for the year. $($Net sales for the year amount to $$1,044,400.)$ c$.$ Claypool purchases merchandise inventory at the same wholesale prices as other hardware stores. Due to its remote location, however, the company must pay between $$15,000$ and $$18,000$ per year in extra transportation charges to receive delivery of merchandise. $($These additional charges are included in the amount shown as cost of goods sold.$)$

d$.$ Does the business appear to suffer or benefit financially from its remote location?

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Required B

Required C

Does the business appear to suffer or benefit financially from its remote location?

Business appears to

Benefit financially