a. Sold merchandise for cash (cost of merchandise $158,19o). b. Recelved merchan

Question

a. Sold merchandise for cash (cost of merchandise $158,19o). b. Recelved merchandise returned by customers as unsatisfactory (but in perfect condition) $288,200 for cash refund (original cost of merchandise $890). c. Sold merchandise (costing $11,700) to a customer on account with terms 2/10, n/30. d. Collected half of the balance owed by the customer In (c) within the discount period. e. Granted a partial allowance relating to credit sales that the customer in (c) had not yet 1,690 26,000 12,740 paid. 1,920 References Section Break CP6-3 Recording Cash Sales, Credit Sales. Sales Discounts, Sales Returns, and Sales Allowances and Anelyzing Gross Profit Percentage [LO 64, L651 value: 1.33 points CP6-3 Part 1 Required 1. Compute Sales Revenue, Net Sales, and Gross Profit for Campus Stop. Sales Revenue Net Sales Gross Profit

Explanation / Answer

Campus Stop

Determination of sales revenue –

Sales revenue = cash sales + credit sales

Cash sales = $288,200

Credit sales = $26,000

Sales revenue = $314,200

Determination of net sales –

Net sales = sales revenue – sales returns – sales discounts – sales allowances

Sales returns = $1,690

Sales discounts = $260 (26,000 x ½ x 2% = $260) for payment made within the discount period

Sales allowances = $1,920

Net sales = $314,200 - $1,690 – $260 - $1,920 = $310,330

Determination of gross profit –

Gross profit = net sales – cost of goods sold

Cost of goods sold = total cost of merchandise – cost of merchandise returned

= $158,190 + $11,700 - $890 = $169,000

Gross profit = $310,330 - $169,000 = $141,330

Gross profit percentage = gross profit/net sales

= 141,330/310,330 =45.54%

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