During its first month of operations, Purrfect Pets purchased 6,300 bags of dog

Question

During its first month of operations, Purrfect Pets purchased 6,300 bags of dog food at a cost of $8 a bag and sold all 6,300 bags of dog food on account with payment terms of $ 1/10, net 30 for $10 each. A total of 2,200 of these bags were sold to customers who paid within the discount period; the other customers paid after the discount period had ended. Sales allowances totaling $200 were granted to customers whose dogs did not like the dog food.

Required:

a. Calculate the gross profit for the month.

b. Calculate the gross profit percentage for the month. (Round your answer to one decimal place (i.e., 0.1234 should be entered as 12.3)).

Explanation / Answer

Perticulars Units Rate Amount Sales 6300 10 63000 Sales Discount 220 Sales Allowance 200 Net Sales 62580 Purchases 6300 8 50400 Gross Profit 12180 Gross Profit Percentage 19.46

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