Question

Required information g Sales with Discounts and Returns and Analyzing Gross Profit Percentage [LO 6-4, LO 6-5] [The following information applies to the questions displayed below. Hair World Inc. is a wholesaler of hair supplies. Hair World uses a perpetual inventory system. The following transactions (summarized) have been selected for analysis: a. Sold merchandise for cash (cost of merchandise $20,797) b. Received merchandise returned by customers as unsatisfactory (but in perfect condition) $35,200 for cash refund (original cost of merchandise $240 c. Sold merchandise (costing $3,800 to a customer on account with terms n/60. 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 400 8,000 4,000 paid. 128 PA6-3 Part 2

Answer 1

Answer

• Check out the below working for calculating correct answer

Transaction	Sales	Sales Return & Allowances	Cost of Goods Sold
a	$                                35,200.00		$           20,797.00
b		$                  400.00	$              (240.00)
c	$                                  8,000.00		$             3,800.00
d
e		$                  128.00
TOTAL	$                                43,200.00	$                  528.00	$           24,357.00

• Requirement 1

Total Sales	$            43,200.00
Less: Sales Return & Allowances	$                  528.00
Net Sales	$            42,672.00
Less: Cost of Goods Sold	$            24,357.00
Gross Profits	$            18,315.00

• Requirement 2

A	Gross Profits	$            18,315.00
B	Net Sales	$            42,672.00
C = (A/B) x 100	Gross Profit percentage	42.9%