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Chapter 5: Q5-6TI (page 273)

Capital City Motorcycle鈥檚 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脳100=$113,500-$85,000$113,500脳100=$28,500$113,500脳100=25.11%

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Most popular questions from this chapter

Macarthy Landscape Supply鈥檚 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

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

Prepare Camilia Communication鈥檚 multi-step income statement for the year ended July 31, 2018.

Is an adjusting entry needed for inventory shrinkage when using the periodic inventory system? Explain.

Triton Department Store uses a periodic inventory system. The adjusted trial balance of Triton Department Store at December 31, 2018, follows:

TRITON DEPARTMENT STORE

Adjusted Trial Balance

December 31, 2018

Balance

Account Title Debit Credit

Cash \(8,200

Accounts Receivable 84,600

Merchandise Inventory (beginning) 37,800

Office Supplies 850

Furniture 86,000

Accumulated Depreciation-Furniture \)18,500

Accounts Payable 29,400

Salaries Payable 2,300

Unearned Revenue 14,900

Notes Payable, long-term 36,000

Common Stock 60,000

Retained Earnings 22,850

Dividends 88,600

Sales Revenue 374,000

Purchases 295,000

Purchase Returns and Allowances 109,000

Purchase Discounts 6,400

Freight-In 300

Selling Expense 41,700

Administrative Expense 26,600

Interest Expense 3,700

Total \(673,350 \)673,350

Requirements

1. Prepare Triton Department Store鈥檚 multi-step income statement for the year ended December 31, 2018. Assume ending Merchandise Inventory is $36,300.

2. Journalize Triton Department Store鈥檚 closing entries.

What account is debited when recording the payment of freight when using the periodic inventory system?
See all solutions

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