During its first month of operations, Purrfect Pets purchased 5,600 bags of dog

Question

During its first month of operations, Purrfect Pets purchased 5,600 bags of dog food at a cost of $6 a bag and sold all 5,600 bags of dog food on account with payment terms of $ 2/10, net 30 for $10 each. A total of 2,800 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. 14 Required a. Calculate the gross profit for the month Gross Profit b. Calculate the gros roftpercentage for the month. (Round your answer to one decimal place (ie. 0.1234 should be entered as 12.3)). Gross Profit Percentage

Explanation / Answer

Calculate Gross profit :

Gross profit percentage = 21640*100/55240 = 39.2%

Sales (5600*10) 56000 Less: Sales allowance (200) Less: Sales discount (2800*10*2%) (560) Net sales 55240 Less: Cost of goods sold (5600*6) (33600) Gross profit 21640

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