2.Abbey Co sold merchandise to Gomez Co. on account $35,000, terms 2/15, net 45.

Question

2.Abbey Co sold merchandise to Gomez Co. on account $35,000, terms 2/15, net 45. The cost of the merchandise sold was $24,500. Abbey Co. issued a credit memo for $3,600 for merchandise returned that originally cost $1,700. Gomez Co. paid the invoice within the discount period. What was the amount of gross profit earned by Abbey Co. on the transaction above?

4.If the physical count of inventory revealed $158,000 of merchandise on hand and the inventory records reported $163,000, what would be the necessary adjusting entry to record inventory shrinkage?

Explanation / Answer

2.

4.

Journal

Sales $35000 Less sales returns -3600 31400 Cost of goods sold 24500 Less inventory returned -1700 -22800 Gross profit $8600

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