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Chapter 5: Q12SE (page 296)

Macarthy Landscape Supply’s selected accounts as of December 31, 2018, follow. Compute the gross profit percentage for 2018.

Selling Expenses $ 12,900

Interest Revenue 900

Net Sales Revenue 134,700

Cost of Goods Sold 114,000

Administrative Expenses 10,200

Short Answer

Expert verified

Answer

The gross profit percentage of the company is15.36%.

Step by step solution

01

Meaning of Gross Profit

In accounting, the term gross profit refers to the amount of profit left with the company after making payment of alldirect and indirect expenses associated with the production of the goods or services.

02

Computation of gross profit

GrossProfit=Netsales-Costofgoodssold=$134,700-$114,000=$20,700

03

Computation of gross profit percentage

Grossprofitpercentage=GrossprofitNetsalesrevenue×100=$20,700$134,700×100=15.36%

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Most popular questions from this chapter

Question: Journalize the following transactions that occurred in January 2018 for Mike’s Amusements. Assume Mike’s uses the gross method to record sales revenue. No explanations are needed. Identify each accounts payable and accounts receivable with the vendor or customer name.

Jan. 4 Purchased merchandise inventory on account from Vanderbilt Company, \(5,000. Terms 1/10, n/EOM, FOB shipping point.

6 Paid freight bill of \)150 on January 4 purchase.

8 Returned half the inventory purchased on January 4 from Vanderbilt Company.

10 Sold merchandise inventory for cash, \(1,100. Cost of goods, \)440. FOB destination.

11 Sold merchandise inventory to Gilmore Corporation, \(10,100, on account, terms of 3/10, n/EOM. Cost of goods, \)5,555. FOB shipping point.

12 Paid freight bill of \(30 on January 10 sale.

13 Sold merchandise inventory to Cadet Company, \)8,800, on account, terms of 3/10, n/45. Cost of goods, \(4,400. FOB shipping point.

14 Paid the amount owed on account from January 4, less return and discount.

18 Purchased inventory of \)4,600 on account from Roberts Corporation. Payment terms were 1/10, n/30, FOB destination.

20 Received cash from Gilmore Corporation, less discount.

26 Paid amount owed on account from January 18, less discount.

28 Received cash from Cadet Company.

29 Purchased inventory from Silk Corporation for cash, \(12,000, FOB shipping point. Freight in paid to shipping company, \)240.

Journalize the following sales transactions for Antique Mall. Explanations are not required. The company estimates sales returns at the end of each month.

Jan. 4 Sold \(16,000 of antiques on the account; credit terms are n/30. The cost of goods is \)8,000.

8 Received a \(300 sales return on damaged goods from the customer. The cost of goods damaged is \)150.

13 Antique Mall received payment from the customer on the amount due from Jan. 4, less the return.

20 Sold \(4,900 of antiques on the account; credit terms are 1/10, n/45, FOB destination. The cost of goods is \)2,450.

20 Antique Mall paid $70 on freight out.

29 Received payment from the customer on the amount due from Jan. 20, less the discount.

The adjusted trial balance of Rockin Robbin Dance Company at April 30, 2018, follows:

ROCKIN ROBBIN DANCE COMPANY

Adjusted Trial Balance

April 30, 2018

Balance

Account Title Debit Credit

Cash \(4,400

Accounts Receivable 38,000

Merchandise Inventory 17,800

Office Supplies 850

Furniture 39,900

Accumulated Depreciation-Furniture \)8,300

Accounts Payable 14,100

Salaries Payable 1,000

Unearned Revenue 6,500

Notes Payable, long-term 12,000

Common Stock 5,000

Retained Earnings 36,150

Dividends 40,000

Sales Revenue 178,500

Cost of Goods Sold 83,700

Selling Expense 19,000

Administrative Expense 16,000

Interest Expense 1,900

Total \(261,550 \)261,550

Requirements

1. Prepare Rockin Robbin’s multi-step income statement for the year ended April 30, 2018.

2. Journalize Rockin Robbin’s closing entries.

3. Prepare a post-closing trial balance as of April 30, 2018.

Lawrence Appliances had the following purchase transactions. Journalize all necessary transactions using the periodic inventory system. Explanations are not required.

Sep. 4 Purchased inventory of \(6,900 on account from Max Appliance Wholesale, an appliance wholesaler. Terms were 3/15, n/30, FOB shipping point.

4 Paid freight charges, \)480.

10 Returned \(300 of inventory to Max.

17 Paid Max Appliance Wholesale, less return, and discount.

20 Purchased inventory of \)3,900 from MY Appliance, an appliance wholesaler. Terms were 1/10, n/45, FOB destination.

22 Received a $400 allowance from MY Appliance for damaged but usable goods.

29 Paid MY Appliance, less allowance and discount.

Journalize the following sales transactions for Straight Shot Archery using the periodic inventory system. Explanations are not required. The company estimates sales returns and allowances at the end of each month.

Aug. 1 Sold \(6,500 of equipment on the account; credit terms are 1/10, n/30.

8 Straight Shot received payment from the customer on the amount due from August 1, less the discount.

15 Sold \)3,100 of equipment on the account; credit terms are n/45, FOB destination.

15 Straight Shot paid \(90 on freight out.

20 Straight Shot negotiated a \)500 allowance on the goods sold on August 15.

24 Received payment from the customer on the amount due from August 15, less the allowance.
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