Question

1)

Given below are account balances for Charlie Company:

Gross sales, $94,000

Sales returns and allowances, $4,000

Selling expenses, $12,000

Cost of goods sold, $52,000

Interest expense, $3,000

How much is the gross profit margin? (enter your percentage as a decimal rounded to two decimal places. Example - enter 46% as .46)

2)

Dorchester Company had the following balances at the end of 2018 and 2019 respectively:

Net Credit Sales - $870,000 for 2018 and $962,000 for 2019.

Accounts Receivable - $84,000 for 2018 and $115,000 for 2019.

Allowance for Doubtful Accounts - $4,000 for 2018 and 5,500 for 2019

Calculate the accounts receivable turnover ratio to one decimal place.

Answer 1

Answers

• Question #1

A	Gross sales	$94,000
B	Sales return and allowances	$4,000
C = A-B	Net Sales	$90,000
D	Cost of Goods Sold	$52,000
E = C-D	Gross Profits	$38,000
F = (E/C) x 100	Gross Profit margin	42%	Answer

• Question #2

		2018	2019
	Account receivables	$84,000	$115,000
	Allowance account	($4,000)	($5,500)
A	Account receivables, net of allowance	$80,000	$109,500
B = (80000 + 109500)/2	Average account receivables, net	$94,750
C	Net Credit sales [2019]	$962,000
D = C/D	Account receivables turnover	10.2