Question

# Campus Stop, Inc., is a student co-op. Campus Stop uses a perpetual inventory system. The following...

Campus Stop, Inc., is a student co-op. Campus Stop uses a perpetual inventory system. The following transactions (summarized) have been selected for analysis: 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 n/30. 20,000 d. Collected half of the balance owed by the customer in (c). 10,000 e. Granted a partial allowance relating to credit sales the customer in (c) had not yet paid. 1,800 find net sales and gross profit.

Sales in transaction (a) = \$275,000

Sales in transaction (c) = \$20,000

Cost of goods sold in transaction (a) = \$152,070

Cost of goods sold in transaction (c) = \$9,000

Sales allowance in transaction (e) = \$1,800

Sales returns in transaction (b) = \$1,600

Cost of merchandise returned = \$800

Net sales = Sales in transaction (a) + Sales in transaction (c) - Sales allowance in transaction (e) - Sales returns in transaction (b)

= 275,000 + 20,000 - 1,800 - 1,600

= \$291,600

Cost of goods sold = Cost of goods sold in transaction (a) + Cost of goods sold in transaction (c) - Cost of merchandise returned

= 152,070 + 9,000 - 800

= \$160,270

Gross profit = Net sales - Cost of goods sold

= 291,600 - 160,270

= \$131,330

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