3. Pacilio Basket Company had an $8,000 beginning balance in its Merchandise Inventory account. The...
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Accounting
3. Pacilio Basket Company had an $8,000 beginning balance in its Merchandise Inventory account. The following information regarding Pacilios purchases and sales of inventory during its Year 1 accounting period was drawn from the companys accounting records:
1) Purchased $41,000 of inventory under terms 2/10, net/30. Transportation costs amounted to $800. The goods were delivered FOB shipping point. Pacilio paid for the inventory within the discount period.
2) Purchased $35,000 of inventory under terms 1/10, net/30. Transportation costs amounted to $700. The goods were delivered to Pacilio FOB destination. Pacilio paid for the inventory after the discount period had expired.
3) Sold inventory that cost $55,000 for $100,000. Transportation costs for goods delivered to customers amounted to $4,200. The goods were delivered FOB destination.
Required
a. Determine the balance in the Inventory account at the end of the accounting period.
b. Is Pacilio or its customers responsible for the transportation costs described in Event 3?
c. Determine the gross margin.
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