(Learning Objective 1: Show how to account for inventory transactions)Bridget Krumb, Inc., purchased inventory costing $125,000 and sold 80% of the goods for $190,000. All purchases and sales were on account. Krumb later collected 25% of the accounts receivable.

1. Journalize these transactions for Krumb, which uses the perpetual inventory system.

2. For these transactions, show what Krumb will report for inventory, revenues, and expenses on its financial statements. Report gross profit on the appropriate statement.