Two different companies, Ripper and Berners, entered into the following inventor
ID: 2401994 • Letter: T
Question
Two different companies, Ripper and Berners, entered into the following inventory transactions during December. Both companies use a perpetual inventory system.
December 3 – Ripper Corporation sold inventory on account to Berners Corp. for $499,000, terms 2/10, n/30. This inventory originally cost Ripper $302,000.
December 8 – Berners Corp. returned inventory to Ripper Corporation for a credit of $4,700. Ripper returned this inventory to inventory at its original cost of $2,844.
Prepare the journal entries to record these transactions on the books of Ripper Corporation. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)
What is the amount of net sales to be reported on Ripper Corporation's income statement?
c.
What is the Ripper Corporation's gross profit percentage? (Round your answer to the nearest whole percent (i.e., 0.1234 should be entered as 12)
•December 3 – Ripper Corporation sold inventory on account to Berners Corp. for $499,000, terms 2/10, n/30. This inventory originally cost Ripper $302,000.
•December 8 – Berners Corp. returned inventory to Ripper Corporation for a credit of $4,700. Ripper returned this inventory to inventory at its original cost of $2,844.
• December 12 – Berners Corp. paid Ripper Corporation for the amount owed.Explanation / Answer
A.In the books of ripper corporation: Amount in $.
Journal entry 1:
Dec 3rd Berner corporation a/c. Dr . 499000
To sales a/c. 499000
(Being sales made on credit basis)
Journal entry 2:
Dec 8th. Sales returns a/c. Dr. 4700
To. Berners corporation a/c . 4700
(Being sold goods rerurned by customer)
Dec 12th . Bank a/c. Dr . 494300
To berner corporation a/c. 494300
(Being amount received from customer $ 499000-4700)
B. The net sales to be reported on the income statement of rippers corporation is $494300. This can be calculated as shown below:
Sales . $494000
Less: sales returns. $4700
Net sales. $ 494300.
C. Gross profit can be calculated as Net sales less cost of goods sold. Which can be calculted as below:
Net sales . $494300
Cost of goods sold . $299156
(302000- 2844)
Gross profit. $195144.
Gross profit percentage = Gross profit÷ cost of good sold
=$195144÷299156*100
=65%
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