During the months of January and February, Solitare Corporation sold goods to two customers. The sequence...

During the months of January and February, Solitare Corporation sold goods to two customers. The sequence of events was as follows: Jan. 6 Sold goods for $100 to Wizard Inc. with terms 2/30, n/60. The goods cost Solitare $70. 6 Sold goods to Spyder Corp. for $80 with terms 5/10, n/60. The goods cost Solitare $60. 14 Collected cash for the amount due from Wizard Inc. Feb. 28 Collected cash for the amount due from Spyder Corp. Required: Compute the total revenue Solitare would report over the two months.

Expert Solution

Answer :

Total revenue Solitare would report over the two months is $ 178 with a gross profit of $ 48.

Particulars	Amount ($)
Sales (January & February )
Wizard Inc	$ 100
Spyder Corp	80
Less : Discount allowed to Wizard Inc ($100 × 2%)	( 2)
Net Sales	$ 178
Less : Cost of goods sold (70 + 60)	(130)
Gross Profit	$ 48

Notes-

Solitare sold goods to Wizard Inc om Jan, 6th with terms 2/30 , n/60. This means, if Wizard Inc pays within 30 days they will be given a 2 % discount on total amount if not, they have to pay the full amount within 60 days.

Wizard Inc made full payments on Jan 14th ( 8 days) and so they are given 2% discount.

Similarly Solitare sold goods to Spyder Corp on Jan 6th with terms 5/10 , n/60 which means Spyder Corp will be entitled to a discount of 5 % on total sale value if paid within 10 days or else they have to pay the full amount within 60 days.

Spyder Corp made payments only on Feb 28th (more than 10 days) hence, not entitled to any discounts. Full amount due is collected.

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