Question

ReadSpeaker E 11-4A Computing Gross Profit (L02 ) The following data were taken from the accounts of Fluter Hardware, a small retail business. Determine the gross profit. Sales Sales returns and allowances Sales discounts Merchandise inventory, January 1 Purchases during the period Purchases returns and allowances during the period Purchases discounts taken during the period Freight-in on merchandise purchased during the period Merchandise inventorv. December 31 $120,000 900 650 35,000 77,600 4,100 2,300 1,250 32.000

Answer 1

Ans.	Step 1 :   Calculations of Net sales:
	Net sales = Sales - Sales returns and allowances - Sales discounts
	$120,000 - $900 - $650
	$118,450
	Step 2 : Calculations for net purchase:
	Net purchase = Purchases - Purchase returns and allowances - Purchase discounts
	$77,600 - $4,100 - $2,300
	$71,200
	Step 3 : Calculations for Cost of goods sold:
	Cost of goods sold = Beginning inventory + Net purchase + Freight in - Ending inventory
	$35,000 + $71,200 + $1,250 - $32,000
	$75,450
	Step 4 : Calculations of Gross profit:
	Gross profit is the difference between net sales and cost of goods sold.
	Gross profit   =   Net sales - Cost of goods sold
	$118,450 - $75,450
	$43,000