Heller Company offers an unconditional return policy to its customers. During the current period, the company...

Heller Company offers an unconditional return policy to its customers. During the current period, the company records total sales of $850,000, with a cost of merchandise to Heller of $340,000. Based on past experience, Heller Company expects 4% of sales to be returned. How much gross profit will Heller Company recognize for the current period? Select one:

A. $510,000 B. $816,000 C. $489,600 D. $360,400 E. $850,000

Expert Solution

C. $489,600

Gross Profit Calculation:

Sales		$ 8,50,000
Less Sales return		$ 34,000
Net Sales	(a)		$ 8,16,000
Cost of goods sold		$ 3,40,000
Less merchandise return		$ 13,600
Net Cost of goods sold	(b)		$ 3,26,400

Gross Profit	(a)-(b)		$ 4,89,600

Working:

Sales return	=	Total Sales	*	% of sales to be returned
	=	$ 8,50,000	*	4%
	=	$ 34,000

Merchandise return	=	Cost of goods sold	*	% of sales to be returned
	=	$ 3,40,000	*	4%
	=	$ 13,600

When sales are returned, merchandise cost will also reduced.

ekkarill92 answered 1 year ago

flower garden sells natural supplements to customers with an unconditional right of return if they are...

flower garden sells natural supplements to customers with an unconditional right of return if they are not satisfied. The right of return extends 60 days. On February 10, 2021, a customer purchases $6,000 of products (cost $3,000) on account. Based on its prior experience, flower garden estimates returns will be 15%. On April 5, 2021, the customer returns $400 of merchandise. Prepare the necessary journal entries to record the transactions on February 10, 2021, and April 5, 2021.

At the end of current period, Heller Corporation's balance for allowance for uncollectible accounts is $120...

At the end of current period, Heller Corporation's balance for allowance for uncollectible accounts is $120 (credit). Heller has aged its accounts receivable and estimated uncollectible accounts as follows (in thousands). Age of Receivables A/R Balance Estimated % uncollectible (Current $12,100 1%) (30-60 days past due 2,640 3%) (61-90 days past due 1,870 6%) (Over 90 days past due 926 10% ) Required: a)Determine the appropriate allowance for uncollectible accounts. b) How will Heller Corporation report its accounts receivable on...

An insurance company is offering a new policy to its customers. Typically, the policy is bought...

An insurance company is offering a new policy to its customers. Typically, the policy is bought by a parent or grandparent for a child at the child’s birth. The details of the policy are as follows: The purchaser (say, the parent) makes the following six payments to the insurance company: First birthday: $ 870 Second birthday: $ 870 Third birthday: $ 970 Fourth birthday: $ 970 Fifth birthday: $ 1,070 Sixth birthday: $ 1,070 ...

An insurance company is offering a new policy to its customers. Typically, the policy is bought...

An insurance company is offering a new policy to its customers. Typically, the policy is bought by a parent or grandparent for a child at the child’s birth. The details of the policy are as follows: The purchaser (say, the parent) makes the following six payments to the insurance company: First birthday: $ 760 Second birthday: $ 760 Third birthday: $ 860 Fourth birthday: $ 860 Fifth birthday: $ 960 Sixth birthday: $ 960 After the child’s sixth birthday, no...

An insurance company is offering a new policy to its customers. Typically the policy is bought...

An insurance company is offering a new policy to its customers. Typically the policy is bought by a parent or grandparent for a child at the child’s birth. The details of the policy are as follows: The purchaser (say, the parent) makes the following six payments to the insurance company: First birthday $ 880 Second birthday 880 Third birthday 980 Fourth birthday 850 Fifth birthday 1,080 Sixth birthday 950 After the child’s sixth birthday, no more payments are made. When...

An insurance company is offering a new policy to its customers. Typically the policy is bought...

An insurance company is offering a new policy to its customers. Typically the policy is bought by a parent or grandparent for a child at the child’s birth. For this policy, the purchaser, say, the parent, makes the following six payments to the insurance company: First birthday $ 820 Second birthday $ 820 Third birthday $ 920 Fourth birthday $ 850 Fifth birthday $ 1,020 Sixth birthday $ 950 After the child’s sixth birthday, no more payments are made. When...

An insurance company is offering a new policy to its customers. Typically, the policy is bought...

An insurance company is offering a new policy to its customers. Typically, the policy is bought by a parent or grandparent for a child at the child’s birth. The details of the policy are as follows: The purchaser (say, the parent) makes the following six payments to the insurance company: First birthday: $ 880 Second birthday: $ 880 Third birthday: $ 980 Fourth birthday: $ 980 Fifth birthday: $ 1,080 Sixth birthday: $ 1,080 ...

An insurance company is offering a new policy to its customers. Typically, the policy is bought...

An insurance company is offering a new policy to its customers. Typically, the policy is bought by a parent or grandparent for a child at the child’s birth. The details of the policy are as follows: The purchaser (say, the parent) makes the following six payments to the insurance company: First birthday: $750 Second birthday: 750 Third birthday: 850 Fourth birthday: 850 Fifth birthday: 950 Sixth birthday: 950 After the child’s sixth birthday, no more payments are made. When the...

An insurance company is offering a new policy to its customers. Typically, the policy is bought...

An insurance company is offering a new policy to its customers. Typically, the policy is bought by a parent or grandparent for a child at the child’s birth. The details of the policy are as follows: The purchaser (say, the parent) makes the following six payments to the insurance company: First birthday: $ 880 Second birthday: $ 880 Third birthday: $ 980 Fourth birthday: $ 980 Fifth birthday: $ 1,080 Sixth birthday: $ 1,080 After the child’s sixth birthday, no...

An insurance company is offering a new policy to its customers. Typically, the policy is bought...

An insurance company is offering a new policy to its customers. Typically, the policy is bought by a parent or grandparent for a child at the child’s birth. The details of the policy are as follows: The purchaser (say, the parent) makes the following six payments to the insurance company: First birthday: $ 780 Second birthday: $ 780 Third birthday: $ 880 Fourth birthday: $ 880 Fifth birthday: $ 980 Sixth birthday: $ 980 After the child’s sixth birthday, no...

Question

Heller Company offers an unconditional return policy to its customers. During the current period, the company...

Solutions

Expert Solution

Related Solutions

flower garden sells natural supplements to customers with an unconditional right of return if they are...

At the end of current period, Heller Corporation's balance for allowance for uncollectible accounts is $120...

An insurance company is offering a new policy to its customers. Typically, the policy is bought...

An insurance company is offering a new policy to its customers. Typically, the policy is bought...

An insurance company is offering a new policy to its customers. Typically the policy is bought...

An insurance company is offering a new policy to its customers. Typically the policy is bought...

An insurance company is offering a new policy to its customers. Typically, the policy is bought...

An insurance company is offering a new policy to its customers. Typically, the policy is bought...

An insurance company is offering a new policy to its customers. Typically, the policy is bought...

An insurance company is offering a new policy to its customers. Typically, the policy is bought...