Question

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

Dec.

3

Sheffield Ltd. sold goods to Bramble Corp. for $57,000, terms n/15, FOB shipping point. The inventory had cost Sheffield $30,200. Sheffield’s management expected a return rate of 3% based on prior experience.

7

Shipping costs of $760 were paid by the appropriate company.

8

Bramble returned unwanted merchandise to Sheffield. The returned merchandise has a sales price of $1,760, and a cost of $960. It was restored to inventory.

Sheffield received the balance due from Bramble.

Calculate the gross profit earned by Sheffield on the above transactions.

Gross Profit

Answer 1

Answer:
Gross profit	$              26,050
Calculations:
Sales revenue	$              57,000
Sales returns and allowance [$57000 x 3%]	-$               1,710
Net sales	$              55,290
Cost of goods sold [$30200-960]	-$             29,240
Gross profit	$              26,050