Sales transactions The following selected transactions were completed by Afforda

Question

Sales transactions

The following selected transactions were completed by Affordable Supplies Co., which sells supplies primarily to wholesalers and occasionally to retail customers.

Indicate the effects of each transaction on the liquidity metric working capital and profitability metric gross profit percent. Enter amounts that decrease net income as negative values. Round percentage values to 1 decimal place. If no entry is required, select "No effect" from the dropdown and leave the corresponding number entry box blank.

Jan. 6. Sold merchandise on account, $14,000, terms FOB shipping point, n/eom. The cost of merchandise sold was $8,400. 8. Sold merchandise on account, $20,000, terms FOB destination, 1/10, n/30. The cost of merchandise sold was $14,000. 16. Sold merchandise on account, $19,500, terms FOB shipping point, n/30. The cost of merchandise sold was $11,700. 18. Received check for amount due for sale on January 8. 19. Issued credit memorandum for $4,500 for merchandise returned from sale on January 16. The cost of the merchandise returned was $2,700. 26. Received check for amount due for sale on January 16 less credit memorandum of January 19. 31. Paid Cashell Delivery Service $3,000 for merchandise delivered during January to customers under shipping terms of FOB destination. 31. Received check for amount due for sale of January 6. Soles transactions The following selected transactions were completed by Affordable Supplies Co., which sells supplies primarily to whelesalers and occasionally to retail customers an. 6 Sold merchandise on account, $14,000, terms FOB shipping point, n/eom. The cost of merchandise sold was $8,400. 8. Sold merchandise on account, $20,000, terms FOB destination, 1/10, v30. The cost of merchandise sold was $14,000 16. Sold merchandise on account, $19,500, terms FOB shipping point, v30. The cost of merchandise sold was $11.700 18. Recaived check for amount due for sale on January. 19 Issued credit memorandum for $4,500 for merchandiso raturned from sale on January 16. The cost of the merchandise roturned was $2,700. 26. Racoivad check for amount due for sale on January 16 lecs crodit memorandurn of January 19. 31. Paid Cashall Delivery Service $3,000 for merchandise deliverod during January to customers undor shipping terms of FOB dostination 31 Received check for amount due for sale of January 6. Indicate the effects of each transaction on the liquidity metric working copital and profitability metric gross profit percant. Enter amounts that decrease net income as negative values. Round percentage values to 1 decimal place. If no entry is required, select effect from the dropdown and leave the corresponding number entry box blonk. Metric Effects Liquidity Profitability Transaction working capital Ability to Achieve Gross Profit percent of 30% Jan. 6 16 18 19 26 31 31 Total s

Explanation / Answer

Metric Effects Liquidity Profitability Transaction Working Capital Ability to Achieve Gross Profit Percent of 30% Net income Calculation for net income Calculation for Gross Profit Percentage Jan. 6 ($14,000) 40% $     5,600 (14000-8400) 5600/14000) 8 ($20,000) 30% $6,000 (20000-14000) (6000/20000) 16 ($19,500) 40% $     7,800 (19500-11700) (7800/19500) 18 $20,000 -1% ($200) (0.01*20000)discount (200/20000) 19 $4,500 -40% ($1,800) (2700-4500) (1800/4500) 26 $                  15,000 No effect 31 ($3,000) -15% ($3,000) (3000/20000) 31 $14,000 No effect

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