Question

The following merchandise transactions occurred in December. Both companies use a perpetual inventory system.

Dec.	3		Swifty Ltd. sold goods to Blue Spruce Corp. for $ 67,700, terms 2/10, n/30, FOB shipping point. The inventory had cost Swifty $ 34,800.
	7		Shipping costs of $ 890 were paid by the appropriate company.
	8		Blue Spruce returned unwanted merchandise to Swifty. The returned merchandise has a sales price of $ 2,100, and a cost of $ 1,120. It was restored to inventory.
	11		Swifty received the balance due from Blue Spruce.

Calculate the gross profit earned by Swifty on the above transactions.

Gross Profit

$ : ???

Answer 1

• All working forms part of the answer
• Working

	Sales	Sales Discount	Sales Return & Allowances	Cost of Goods Sold
Dec 3: Sale by Swiftly	$           67,700.00			$          34,800.00
Dec 8: Merchandised returned back			$            2,100.00	$          (1,120.00)
Dec 11: Payment received within discount term		$            1,312.00 [(67700 – 2100) x 2%]
Total	$           67,700.00	$            1,312.00	$            2,100.00	$          33,680.00

• Dec 7, Freight will be paid by the buyer and does not affect the Gross Profit.
• Answer

Sales		$          67,700.00
Less:
Sales Discount	$             1,312.00
Sales Return & Allowances	$             2,100.00	$            3,412.00
Net Sales		$          64,288.00
Cost of Goods Sold		$          33,680.00
Gross Profits		$          30,608.00 = Answer

• Answer: Gross Profits = $ 30,608