Question

In: Accounting

a. Sold merchandise for cash (cost of merchandise $152,590). $ 276,700 b. Received merchandise returned...

Sold merchandise for cash (cost of merchandise $152,590).

276,700

Received merchandise returned by customers as unsatisfactory (but in perfect condition) for cash refund (original cost of merchandise $810).

1,610

Sold merchandise (costing $9,450) to a customer on account with terms 2/10, n/30.

21,000

Collected half of the balance owed by the customer in (c) within the discount period.

10,290

Granted a partial allowance relating to credit sales that the customer in (c) had not yet paid.

1,820

1. Compute Sales Revenue, Net Sales, and Gross Profit for Campus Stop.

2. Compute the gross profit percentage. (Round your answer to 2 decimal places.)

3. Campus Stop is considering a contract to sell merchandise to a campus organization for $16,000. This merchandise will cost Campus Stop $12,500. What would be the increase or decrease to Campus Stop's gross profit and gross profit percentage? TIP: The impact on gross profit (a dollar amount) may differ from the impact on gross profit percentage. (Round "Gross Profit Percentage" to 1 decimal place.)

Solutions

Expert Solution

Working Note

Transaction	COGS ($)	Sales ($)	Sales Returns & Allowances ($)	Sales Discount ($)
a	152,590	276,700
b.	(810)		1,610
c.	9,450	21,000
d.				21,000 * 50 % * 2 % = 210
e			1,820
Total	$161,230	$297,700	$3,430	$210

Answer 1

Sales Revenue = $297,700 [refer working note above]

Net Sales = Sales Revenue - Sales Returns & Allowances - Sales Discount

= $297,700 - $3,430 - $210 = $294,060

Gross Profit = Net Sales - COGS = $294,060 - $161,230 = $132,830

Answer 2

Gross Profit Percentage = [ Gross Profit / Net Sales]* 100 = [$132,830 / $294,060] *100 = 45.17 %

Answer 3

Total Net sales after additional sales = $294,060 + $16,000 = $310,060

COGS after additional sales = $161,230 + $12,500 = $173,730

New Gross Profit amount = $310,060 - $173,730 = $136,330

New Gross Profit Percentage = [$136,330 / $310,060] * 100 = 43.97 %

Impact on gross profit amount = $136,330 - $132,830 = $3,500 increase

Impact on gross profit percentage = 43.97 % - 45.17 % = 1.2 % decrease

ekkarill92 answered 10 months ago

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