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 $495,000, terms 3/10, n/30. This inventory originally cost Ripper $303,000. • December 8 – Berners Corp. returned inventory to Ripper Corporation for a credit of $4,600. Ripper returned this inventory to inventory at its original cost of $2,816. • 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.)

B. What is the amount of net sales to be reported on Ripper Corporation's income statement?

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)

B. What is the amount of net sales to be reported on Ripper Corporation's income statement?

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)

Explanation / Answer

a) Dec-03 Accounts receivable Dr 495000             Sales Cr 495000 ( To record sale on account) Dec-03 Cost of goods sold Dr 303000            Inventory Cr 303000 ( To record COGS on sold inventory) Dec-08 Sales return Dr 4600           Accounts receivable Cr 4600 ( To record goods returned) Dec-08 Inventory Dr 2816         Cost of goods sold Cr 2816 ( To record cost of sales return) Dec-12 Cash Dr 475688 Discount Dr 14712          Accounts receivable Cr 490400 ( To record payment received for balance amount) Accounts receivable = 495000 - 4600 = 490400 Discount = 490400 * 3% = 14712 Balance 490400 - 14712 = 475688 is received in cash b) Net sales to be reported is Sales 495000 Less : Sales return 4600 Discount 14712 Net Sales 475688 c) Gross Profit= Net Sales - Cost of goods sold                         = 475688 - ( 303000 - 2816)                          = 475688 - 300184                          = 175504 Gross profit % = gross profit / Net sales * 100 = 37%

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