Two different companies, Ripper and Berners, entered into the following inventor

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 $483,000, terms 2/10 n/30. This inventory originally cost Ripper $320,000 December 8 - Berners Corp. returned inventory to Ripper Corporation for a credit of $3,900. Ripper returned this inventory to inventory at its original cost of $2,584 December 12 - Berners Corp. paid Ripper Corporation for the amount owed Required a. 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.) View transaction list Journal entry worksheet 4 Record the entry for sale of inventory on account. Note: Enter debits before credits Date General Journal Debit Credit Dec 03 Record entry Clear entry View general journal

Explanation / Answer

Solution a:

Solution b:

Amount of net sales to be reported in Ripper corporation income statement = $483,000 - $3,900 - $9,582 = $469,518

Solution c:

Gross profit % = Gross profit / Net Sales

Gross profit = Net sales - COGS = $469,518 - ($320,000 - $2,584) = $152,102

Gross profit percentage = Gross profit / Net Sales = $152,102 / $469,518 = 32%

Journal Entries - Ripper Corporation Date Particulars Debit Credit 3-Dec Accounts Receivable - Berners Corporation Dr $483,000.00         To Sales revenue $483,000.00 (To record sales on account) 3-Dec Cost of goods sold Dr $320,000.00         To Inventories $320,000.00 (To record transfer of inventory to COGS on account of sales) 8-Dec Sales return and allowances Dr $3,900.00         To Accounts Receivable - Berners Corporation $3,900.00 (To record sales return) 8-Dec Inventories Dr $2,584.00         To Cost of goods sold $2,584.00 (To record goods returned to be taken into inventroy) 12-Dec Cash Dr $469,518.00 Sales discount Dr $9,582.00         To Accounts Receivable - Berners Corporation $479,100.00 (To record collection from customers)

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