Question

1.

Haverty Industries increased its gross profit rate from 18.4% in 2021 to 23.7% in 2022. Which of the following would be a possible explanation for this change?

Haverty's new profit lines with lower margins in 2022 became a larger component of their sales.

Haverty's average margin between the selling price and the inventory cost decreased over this two-year period.

Haverty increased its product markdowns in 2022.

Haverty's global sourcing efforts at the beginning of 2022 resulted in a lower cost of merchandise sold.

2.

Current Attempt in Progress

What is a difference between the profit margin and the gross profit rate?

The gross profit rate is computed by dividing net sales by gross profit and the profit margin is computed by dividing net sales by net income.

None, these are interchangeable terms.

The gross profit rate will normally be higher than the profit margin ratio.

A profit margin of 7% means that 7 cents of each net sales dollar ends up in net income and a gross profit rate of 7% means that the cost of the goods were 7% of the selling price.

3.

Concord’s Fashions sold merchandise for $197000 cash during the month of July. Returns that month totaled $4600. If the company’s gross profit rate is 30%, Concord’s will report monthly net sales revenue and cost of goods sold of

$192400 and $57720.

$192400 and $134680.

$197000 and $134680.

$197000 and $137900.

4.

Ayayai’s Fabrics sold merchandise for $209000 cash during the month of July. Returns that month totaled $3900. If the company’s gross profit rate is 45%, Ayayai will report monthly net sales revenue and cost of goods sold of

$209000 and $114950.

$205100 and $112805.

$209000 and $112805.

$205100 and $92295.

5.

Ayayai Corp. purchases $450 of merchandise on credit. Using the periodic inventory approach, Ayayai would record this transaction as:

Accounts Payable	450
Inventory		450

Accounts Payable	450
Purchases		450

Inventory	450
Accounts Payable		450

Purchases	450
Accounts Payable		450

Answer 1

Req 1.
Answer is Haverty's global sourcing efforts at the beginning of 2022 resulted in lower cost of merchandise sold.
Req 2.
Answer. The gross profit rate wll normally be higher than the profit margin ratio.
Req 3.
Answer is $192,400 and $134,680
Explanation:
Sales revenue-Gross		1,97,000
Less: Returns		4,600
Net sales revenue		1,92,400
Less: Gross profit @30%	57,720
Cost of goods sold		1,34,680
Req 4.
Answer is $205,100 and $112,805
Explanation:
Sales revenue-Gross		2,09,000
Less: Returns		3,900
Net sales revenue		2,05,100
Less: Gross profit @45%	92,295
Cost of goods sold		1,12,805
Req 5.
Answer is.
Purchase account		450
Accounts payable			450