Question

Required information [The following information applies to the questions displayed below.] Larry's Building Supplies (LBS) is a local hardware store. LBS uses a perpetual inventory system. The following transactions (summarized) have been selected for analysis: $ 755,000 a. Sold merchandise for cash (cost of merchandise $361,350). b. Received merchandise returned by customers as unsatisfactory (but in perfect condition) cash refund (original cost of merchandise $5,300). c. Sold merchandise (costing $11,160) to a customer on account with terms n/30. d. Collected half of the balance owed by the customer in (c). e. Granted a partial allowance relating to credit sales the customer in (c) had not yet paid. 8,100 18,600 9,300 2,650

Find the net sales and gross profit

Answer 1

CALACULATION OF NET SALES AND GROSS PROFIT :

NET SALES

= Gross Sales - Sales Return - Sales allowance

= ( $755000+$18600 ) - $8100 - $2650.

= $773600 - $8100 - $2650

= $762850.

GROSS PROFIT

= Net sales - total cost of goods sold

= $762850 - ( cost of goods sold - cost of goods returned)

= $762850 - [($361350+$11160)-$5300]

= $762850 - ( $372510 - $5300 )

= $762850 - $367210

= $395640.

* There is no sales discount allowed to the customer.

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