Question

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.

Answer 1

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