Question

Nicole's Getaway Spa (NGS) has been so successful that Nicole has decided to expand her spa by selling merchandise. She sells things such as nail polish, at-home spa kits, cosmetics, and aromatherapy items. Nicole uses a perpetual inventory system and is starting to realize all of the work that is created when inventory is involved in a business. The following transactions were selected from among those completed by NGS in August.

Aug.2 Sold a bundle of spa services with a merchandise basket. When sold separately, the spa service part of the bundle sells for $420 and the merchandise basket normally sells for $180. Together, the bundle was sold to Val Amy for cash at a selling price of $540 (total). Val booked a spa treatment for August 10, and she took the basket of goods with her. The goods had cost NGS $105.

Aug.3 Sold 5 identical items of merchandise to Cosmetics R Us on account at a selling price of $550 (total); terms n/30. The goods cost NGS $450.

Aug.6 Cosmetics R Us returned one of the five items purchased on August 3. The item could still be sold by NGS in the future and credit was given to the customer.

Aug.10 Val Amy used one of the three spa treatments she had purchased as part of the bundle sold to her on August 2.

Aug.20 Sold two at-home spa kits to Meghan Witzel for $350 cash. The goods cost NGS $121.

Aug.22 Cosmetics R Us paid its remaining account balance in full.

1. Prepare all journal enteries

2. calculate Sales Revenue and Cost of Goods Sold

3. Calculate Gross Profit Percentage

Answer 1

1	Prepare all journal entries
Date	General Journal	Debit	Credit
2-Aug	Cash	$540
	Unearned Service Revenue		$378
	Sales Revenue		$162
2-Aug	Cost of goods sold	$105
	Inventory		$105
3-Aug	Accounts receivable	$550
	Sales revenue		$550
3-Aug	Cost of goods sold	$450
	Inventory		$450
6-Aug	Sales return (550/5)	$110
	Accounts receivable		$110
6-Aug	Inventory	$90
	Cost of goods sold (450/5)		$90
10-Aug	Unearned service revenue	$126
	Service Revenue		$126
	(378/3 = 126 each)
20-Aug	Cash	$350
	Sales revenue		$350
20-Aug	Cost of goods sold	$121
	Inventory		$121
22-Aug	Cash	$440
	Accounts receivable		$440
2	Calculate sales revenue and cost of goods sold
		Sales Revenue	Cost of goods sold
	2-Aug	$162	$105
	3-Aug	$550	$450
	6-Aug	($110)	($90)
	20-Aug	$350	$121
	Total	$952	$586
3	Calculate gross profit percentage
	Sales	$952
	Cost of goods sold	$586
	Gross Profit	$366
	Gross Profit percentage	38.45%
	Working note:
	When sold separately,
	Spa service price	$420
	Merchandise basket	$180
	Total	$600
	IN the bundled offer
	Spa service price -70%(420/600)	378
	Merchandise basket - 30% (180/600)	162
	Total	540