Question

Presented here are selected transactions for Toth Company during September of the current year. Toth Company uses a perpetual inventory system. Toth Company estimates a return rate of 5% based on past experience.

Sept.	2		Purchased equipment on account for $61,900, terms n/30, FOB destination.
	3		Freight charges of $970 were paid by the appropriate party on the September 2 purchase of equipment.
	4		Purchased supplies for $3,800 cash.
	6		Purchased inventory on account from Southlake Corp. at a cost of $63,800, terms 1/15, n/30, FOB shipping point.
	7		Freight charges of $1,800 were paid by the appropriate party on the September 6 inventory purchase.
	8		Returned damaged goods costing $5,200 that were originally purchased from Southlake Corp. on September 6. Received a credit on account.
	9		Sold goods costing $15,400 to Fischer Limited for $20,000 on account, terms n/30, FOB destination.
	10		Freight charges of $410 were paid by the appropriate party on the September 9 sale of inventory.
	17		Received the balance due from Fischer.
	20		Paid Southlake Corp. the balance due.
	21		Purchased inventory for $6,400 cash.
	22		Sold inventory costing $18,900 to Kun-Tai Inc. for $27,900 on account, terms n/30, FOB shipping point.
	23		Freight charges of $400 were paid by the appropriate party on the September 22 sale of inventory.
	28		Kun-Tai returned goods sold for $950 that cost $700. The merchandise was restored to inventory.

Record the September transactions on Toth Company’s books. (List all debit entries before credit entries. Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Round answers to the nearest whole dollar, e.g. 5,275.)

Determine Toth Company’s sales and cost of goods sold for September.

Sales		$
Cost of goods sold		$

Calculate Toth Company’s gross profit as a dollar amount and the gross profit margin as a percentage. (Round gross profit margin to 1 decimal place, e.g. 15.2%.)

Gross profit		$
Gross profit margin

Answer 1

	Equipment Dr.	61900
	Accounts Payable		61,900
	(Equipment purchased on account)
	Equipment Dr.	970
	Cash		970
	(Payment of freight on equipment)
	Supplies Dr.	3800
	Cash		3800
	(Supplies purchased for cash)
	Purchases Dr.	63800
	Accounts Payable		63800
	(Payment of inventory on account)
	Freight In Dr.	1,800
	Cash		1,800
	(Paid freight in cash)
	Accounts Payable Dr.	5,200
	Purchase Returns and allowances		5,200
	(Returnd damaged goods)
	Accounts Receivable Dr.	20,000
	Sales Revenue		20,000
	(Sales made on account)
	Delivery Expense Dr.	410
	Cash		410
	(Paid freight on FOB Destination sale)
	Cash Dr.	19,600		=20000*98%
	Sales Discount	400		=20000*2%
	Accounts receivable		20,000
	(Cash collected net of 2% discount)
	Accounts Payable Dr.	68600		=63800-5200
	Cash		58014	=68600*99%
	Purchase Discount		686	=68600*1%
	(Paid net of 1% discount)
	Purchases Dr.	6,400
	Cash		6,400
	(Purchased inventory for cash)
	Accounts Receivable Dr.	27,900
	Sales Revenue		27,900
	(Sales made on account)
	No entry
	Sales Returns and allowances Dr.	950
	Accounts receivable		950
	(Sales returns)

Purchases= 61900+9700+3800+63800+6400-5200

= 130470

Sales= 20000+27900-950

= 46950

Cost of Goods sold= 15400+18900

= 34300

Gross Profit= Sales- COGS

= 46950- 34300

= 12650

Gross Profit Margin= (sales- cogs)/ sales

= (46950-34300)/ 34300

= 36.88%