Question

The following merchandise transactions occurred in December. Both companies use a perpetual inventory system. Dec. 3...

The following merchandise transactions occurred in December. Both companies use a perpetual inventory system.

Dec. 3 Flounder Ltd. sold goods to Novak Corp. for $70,000, terms n/15, FOB shipping point. The inventory had cost Flounder $37,200. Flounder’s management expected a return rate of 3% based on prior experience.
7 Shipping costs of $960 were paid by the appropriate company.
8 Novak returned unwanted merchandise to Flounder. The returned merchandise has a sales price of $2,160, and a cost of $1,160. It was restored to inventory.
11 Flounder received the balance due from Novak.

(c) Calculate the gross profit earned by Flounder on the above transactions.

Gross profit: _____________

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