Problem:
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.
Required:
Question 1: Journalize these transactions for Krumb, which uses the perpetual inventory system.
Question 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.
Note: Please show how to work it out.