Question

At the end of 2024, before adjustments: Net Sales = 4000, and Cost of Goods Sold...

At the end of 2024, before adjustments: Net Sales = 4000, and Cost of Goods Sold =2200.......Gross Profit = 1800...

At the end of 2024, the company estimated that 492 of their 2024 sales would probably be returned in 2025...

The cost of goods sold associated with the expected returns was 204..

What is the amount of Gross Profit, after adjustments?

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Answer #1

Sol:

Let us calculate Gross Profit before Sales Returns in 2024

Formula for Gross profit is Net Sales less Cost of goods sold = 4000 - 2200 = 1800

The estimated Sales Returns in 2025 is 492 out of Net Sales of 4000

So Sales after the returns is 4000 - 492 = 3508 --- A

The Cost of goods sold with respect to sales returns is 204

After returns the Cost of goods sold is 2200 - 204 = 1996 ---- B

So Gross Profit after Sales Returns in 2025 is calculated as follows:

Gross Profit after adjustments =

Net Sales (after Retuns) less Cost of goods sold (after returns) = A - B = 3508 - 1996 = 1512

Therefore Gross Profit after adjustments is 1512

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