recording cash sales credit sales sales discounts sales returns and sales allowances 727196
Recording Cash Sales, Credit Sales, Sales Discounts, Sales Returns, and Sales Allowances and Analyzing Gross Profit Percentage
Campus Stop, Incorporated, is a student co op. Campus Stop uses a perpetual inventory system. The following transactions (summarized) have been selected from 2010:
|
a. |
Sold merchandise for cash (cost of merchandise $152,070). |
$275,000 |
|
b. |
Received merchandise returned by customers as unsatisfactory |
|
|
|
(but in perfect condition), for cash refund (original cost of merchandise $800). |
1,600 |
|
c. |
Sold merchandise (costing $9,000) to a customer, on account with terms 2/10, n/30. |
20,000 |
|
d. |
Collected half of the balance owed by the customer in (c) within the discount period. |
9,800 |
|
e. |
Granted an allowance to the customer in (c). |
1,800 |
Required:
1. Compute Sales Revenue, Net Sales, and Gross Profit for Campus Stop.
2. Compute the gross profit percentage (using the formula shown in this chapter).
3. Prepare journal entries to record transactions (a)–(e).
4. Campus Stop is considering a contract to sell merchandise to a campus organization for $15,000. This merchandise will cost Campus Stop $12,000. Would this contract increase (or decrease) Campus Stop’s gross profit and gross profit percentage? How should Campus Stop decide whether to accept the contract?