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Question - Boston bait shop uses a periodic inventory system. At December 31, year 2, the accounting records include the following information:
Inventory (as of December 31, year 1) $2,800
net sales 79,600
purchases 30,200
A complete physical inventory taken at december 31, year 2, indicates merchandise costing $3,000 remains in stock.
a. How were the amounts of beginning and ending inventory determined?
b. Compute the amount of the cost of goods sold in year 2.
d. Prepare a partial income statement showing the shop's gross profit for the year.
e. Describe why a company such as boston bait shop would use a periodic inventory system rather than a perpetual inventory system.
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