Received merchandise returned by customers as unsatisfactory (but in perfect con
ID: 2477097 • Letter: R
Question
Received merchandise returned by customers as unsatisfactory (but in perfect condition), for cash refund (original cost of merchandise $330).
Hair World is considering a contract to sell merchandise to a hair salon chain for $14,500. This merchandise will cost Hair World $9,760. What would be the increase (or decrease) to Hair World’s gross profit and gross profit percentage? (Round "Gross Profit Percentage" to 1 decimal place.)
a. Sold merchandise for cash (cost of merchandise $26,797). $47,200 b.Received merchandise returned by customers as unsatisfactory (but in perfect condition), for cash refund (original cost of merchandise $330).
550 c. Sold merchandise (costing $4,513) to a customer, on account with terms 2/10, n/30. 9,500 d. Collected half of the balance owed by the customer in (c) within the discount period. 4,655 e. Granted a partial allowance relating to credit sales that the customer in (c) had not yet paid 152Explanation / Answer
Compute Sales Revenue, Net Sales, and Gross Profit for Hair World
Sales Revenue = 56,700
Net sales = 56,700-(550+152+95) = 55,903
Gross profit = Sales-Cost of sales
= 55,903-(26,797,+4,513) = 24,593
Compute the gross profit percentage
gross Profit = gross Profit/ Net Sales*100 = (24,593/55,903)*100= 43.9%
Hair World is considering a contract to sell merchandise to a hair salon chain for $14,500. This merchandise will cost Hair World $9,760. What would be the increase (or decrease) to Hair World’s gross profit and gross profit percentage
Answer
The contract will increase Hair World’s gross profit by $4,740 (14,500-9,760) , but will decrease the gross profit percentage, as calculated below:
Gross Profit Percentage = Gross Profit/Net sales*100 = ($41,230+$4,740)/(55,903+14,500)*100 = $45,970/70,403 = 66.7%
2.Compute the gross profit percentage
gross Profit = gross Profit/ Net Sales*100 = (24,593/55,903)*100= 43.9%
Hair World is considering a contract to sell merchandise to a hair salon chain for $14,500. This merchandise will cost Hair World $9,760. What would be the increase (or decrease) to Hair World’s gross profit and gross profit percentage
Answer
The contract will increase Hair World’s gross profit by $4,740 (14,500-9,760) , but will decrease the gross profit percentage, as calculated below:
Gross Profit Percentage = Gross Profit/Net sales*100 = ($41,230+$4,740)/(55,903+14,500)*100 = $45,970/70,403 = 66.7%
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