Winters Hardware Store completed the following merchandising transactions in the

Question

Winters Hardware Store completed the following merchandising transactions in the month of May. At the beginning of May, Winters' ledger showed Cash of $11,200 and Common Stock of $11,200 May 1 Purchased merchandise on account from Black Wholesale Supply for $7,500, terms 1/10, n/30 2 Sold merchandise on account for $5,000, terms 2/10, n/30. The cost of the merchandise sold was $3,750 5 Received credit from Black Wholesale Supply for merchandise returned $400 9 Received collections in full, less discounts, from customers billed on May 2 10 Paid Black Wholesale Supply in full, less discount. 11 Purchased supplies for cash $1,260 12 Purchased merchandise for cash $4,340 15 Received $322 refund for return of poor-quality merchandise from supplier on cash purchase 17 Purchased merchandise from Wilhelm Distributors for $2,550, terms 2/10, n/30 19 Paid freight on May 17 purchase $350. 24 Sold merchandise for cash $7,700. The cost of the merchandise sold was $5,740 25 Purchased merchandise from Clasps Inc. for $1,120, terms 3/10, n/30 27 Paid Wilhelm Distributors in full, less discount. 29 Made refunds to cash customers for returned merchandise $125. The returned merchandise had cost $94 31 Sold merchandise on account for $1,792, terms n/30. The cost of the merchandise sold was $1,162

Explanation / Answer

Income Statement (Partial) Sales Revenue Sales   14492 Less:    Sales Return and allowances 125    Sales Discounts 100 225 Net sales 14267 Cost of goods sold 9396 Gross Profit 4871 Profit margin 20.1 % (4871-1960)/14492 Gross profit rate 33.6 % (4871/14492)*100

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