Chapter 5 Homework

1.   Gross Profit

During the current year, merchandise is sold for $201,900 cash and $470,800 on account. The cost of the goods sold is $511,300. What is the amount of the gross profit?

2. Purchases Transactions

Rolfes Company purchased merchandise on account from a supplier for $7,200, terms 1/10, n/30.  Rolfes returned $1,400 of the merchandise and received full credit.

1.  If Rolfes Company pays the invoicewithin the discount period, what is the amount of cash required for the payment? If required, round the answer to the nearest dollar. $ _____
2.  What account is debited by Rolfes Company to record the return?  _______

3.  Shore Co. sold merchandise to Blue Star Co. on account, $32,400, terms FOB shipping point, 2/15, n/30. The cost of the goods sold is $17,500. Shore paid freight of $900.

Journalize the entries for Shore and Blue Star for the sale, purchase, and payment of amount due. Refer to the appropriate company’s Chart of Accounts for exact wording of account titles.

4.   Determining Gross Profit

During the current year, merchandise is sold for $679,000. The cost of the goods sold is $420,980.

a.  What is the amount of the gross profit? _____

b.   Compute the gross profit percentage (gross profit divided by sales). Round to the nearest whole number.

c.  When will the income statement report net income?

5.  Determining Cost of Goods Sold

For a recent year, TechMart reported sales of $47,486 million. Its gross profit was $10,922 million.

What was the amount of TechMart’s cost of goods sold? (Enter answer in millions.)

6. On March 31, 2018, the balances of the accounts appearing in the ledger of Royal Furnishings Company, a furniture wholesaler, are as follows:

7.  Sales Transactions

Journalize the following merchandise transactions:

a. Sold merchandise on account, $11,250 with terms 2/10, n/30. The cost of the goods sold was $6,750.

b. Received payment less the discount.

c. Refunded $390 to customer for defective merchandise that was not returned.

8.   Purchase-Related Transactions

A retailer is considering the purchase of 250 units of a specific item from either of two suppliers. Their offers are as follows:

Supplier One: $400 a unit, total of $100,000, 1/10, n/30, no charge for freight.
Supplier Two: $399 a unit, total of $99,750, 2/10, n/30, plus freight of $975.

Price of Supplier One: _____________

Price of Supplier Two: _____________

Which of the two offers, Supplier One or Supplier Two, yields the lower price?  ________

9  Warwick’s Co., a women’s clothing store, purchased $75,000 of merchandise from a supplier on account, terms FOB destination, 2/10, n/30. Warwick’s returned $9,000 of the merchandise, receiving a credit memo.

Journalize Warwick’s entries to record (a) the purchase, (b) the merchandise return, and (c) the payment within the discount period of ten days, and (d) payment beyond the discount period of ten days. Refer to the Chart of Accounts for exact wording of account titles. For grading purposes use December 31 as the date for all transactions.

10.  

Journalize entries for the following related transactions of Lilly Heating & Air Company. Refer to the Chart of Accounts for exact wording of account titles.

11.   Sales-related transactions

Sayers Co. sold merchandise on account to a customer for $80,000 terms 1/10, n/30. The cost of the goods sold was $60,000.

a. Journalize Sayers’ entries to record the sale.

b. Journalize the receipt of payment within the discount period.

c.  Journalize the entry to record the receipt of payment beyond the discount period of ten days

12. Determining Amounts to be Paid on Invoices

Determine the amount to be paid in full settlement of each of the following invoices, assuming that credit for returns and allowances was received prior to payment and that all invoices were paid within the discount period.

a

b

c

d

e