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Chapter 5: Q5-6TI (page 273)

Capital City Motorcycle’s selected accounts as of December 31, 2018, follow:

Selling Expenses $ 10,500

Interest Revenue 1,000

Net Sales Revenue 113,500

Cost of Goods Sold 85,000

Administrative Expenses 8,000

Determine the gross profit percentage for the year ended December 31, 2018.

Short Answer

Expert verified

The gross profit percentage of the company is 25.11%.

Step by step solution

01

Meaning of Gross Profit

Gross profit refers to the profit left with the company after making the settlement of all the costs and expenses associated with the manufacturing and sale of a product from its net sales revenue.

02

Computation of gross profit percentage

Gross profit percentage=Net sales revenue-Cost of goods soldNet sales×100=$113,500-$85,000$113,500×100=$28,500$113,500×100=25.11%

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Most popular questions from this chapter

Camilia Communications reported the following figures from its adjusted trial balance for its first year of business, which ended on July 31, 2018:

Cash \( 2,900 Cost of Goods Sold \) 18,700

Selling Expenses 1,400 Equipment, net 9,500

Accounts Payable 4,300 Accrued Liabilities 1,800

Common Stock 4,365 Net Sales Revenue 29,200

Notes Payable, long-term 500 Accounts Receivable 3,200

Merchandise Inventory 1,100 Interest Expense 65

Administrative Expenses 3,300

Requirements

1. Prepare Camilia Communication’s statement of retained earnings for the year ended July 31, 2018. Assume that there were no dividends declared during the year and that the business began on August 1, 2017.

2. Prepare Camilia Communication’s classified balance sheet at July 31, 2018. Use the report format.

What are the four steps involved in the closing process for a merchandising company?

The adjusted trial balance of Quality Office Systems at March 31, 2018, follows:

Requirements

1. Journalize the required closing entries at March 31, 2018.

2. Set up T-accounts for Income Summary; Retained Earnings; and Dividends. Post the closing entries to the T-accounts, and calculate their ending balances.

3. How much was Quality Office’s net income or net loss?

Describe the operating cycle of a merchandiser.

Journalize the following sales transactions for Paul Sportswear. Explanations are not required.

Aug. 1 Paul sold \(66,000 of women’s sportswear on account, credit terms are 2/10, n/30. Cost of goods is \)33,000. Paul uses the gross method to record sales revenue.

25 Paul receives payment from the customer on the amount due.
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