Question

Merchandise Co. sold merchandise with a list price of $700,000 ($560,000 cost) to a customer; payment...

Merchandise Co. sold merchandise with a list price of $700,000 ($560,000 cost) to a customer; payment term 3/10, 1/20, n/30, on March 10, 2019. Discount applied only to the portion that was paid, if applicable.

On March 15, the customer returned value of $120,000 (Cost $96,000) merchandise.

On March 25, three-fourth of the remaining balance was paid.

Assume this transaction with the customer was the only sales made in March, 2019.

Answer the following questions: (Provide number with no dollar sign, no thousands separator.)

How much is the gross sales revenue?

How much is the net sales?

How much is the gross profit?

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Answer #1
Gross sales revenue=$ 700000
Net sales=Gross sales revenue-Sales returns-Sales discounts
Sales was made on March 10
Payment made on March 25
Payment made within 15 days
Hence, eligible for 1% discount on the payment made
Sales discount=(700000-120000)*3/4*1%=$ 4350
Net sales=700000-120000-4350=$ 575650
Gross profit=Net sales-Cost of goods sold
Cost of goods sold:
$
Mar 10. 560000
Mar 15. -96000
Cost of goods sold (net) 464000
Gross profit=575650-464000=$ 111650
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