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Chapter 9: Question 13E (page 478)

Gross Profit Method) Each of the following gross profit percentages is expressed in terms of cost. 1. 20%. 3. 331 /3%. 2. 25%. 4. 50%. Instructions Indicate the gross profit percentage in terms of sales for each of the above.

Short Answer

Expert verified

Gross profit on sales are as follows:

(1) 16.67%

(2) 20%

(3) 25%

(4) 33.33%

Step by step solution

01

Calculation of gross profit on sales

(1) Gross profit on sales is calculated as follows:

Grossprofitonsellingprice=Percentagemarkuponcost100%+Percentagemarkuponcost=20%100%+20%=16.67%

02

Calculation of gross profit on sales

(1) Gross profit on sales is calculated as follows:

Grossprofitonsellingprice=Percentagemarkuponcost100%+Percentagemarkuponcost=25%100%+25%=20%

03

Calculation of gross profit on sales

(1) Gross profit on sales is calculated as follows:

Grossprofitonsellingprice=Percentagemarkuponcost100%+Percentagemarkuponcost=3313%100%+3313%=25%

04

Calculation of gross profit on sales

(1) Gross profit on sales is calculated as follows:

Grossprofitonsellingprice=Percentagemarkuponcost100%+Percentagemarkuponcost=50%100%+50%=33.33%

Thus, gross profit for case 1, 2, 3, and 4 equals 16.67%, 20%, 25% and 33.33% respectively.

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Most popular questions from this chapter

Fuque Inc. uses the retail inventory method to estimate ending inventory for its monthly financial statements. The following data pertain to a single department for the month of October 2018. Inventory, October 1, 2018 At cost \( 52,000 At retail 78,000 Purchases (exclusive of freight and returns) At cost 272,000 At retail 423,000 Freight-in 16,600 Purchase returns At cost 5,600 At retail 8,000 Markups 9,000 Markup cancellations 2,000 Markdowns (net) 3,600 Normal spoilage and breakage 10,000 Sales revenue 390,000 Instructions (a) Using the conventional retail method, prepare a schedule computing estimated lower-of-cost-or-market inventory for October 31, 2018. (b) A department store using the conventional retail inventory method estimates the cost of its ending inventory as \)60,000. An accurate physical count reveals only $47,000 of inventory at lower-of-cost-or-market. List the factors that may have caused the difference between the computed inventory and the physical count.

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Eastman Company lost most of its inventory in a fire in December just before the year-end physical inventory was taken. Corporate records disclose the followingInventory (beginning) \( 80,000 Sales revenue \)415,000 Purchases 290,000 Sales returns 21,000 Purchase returns 28,000 Gross profi t % based on net selling price 35%Merchandise with a selling price of \(30,000 remained undamaged after the fire, and damaged merchandise has a net realizable value of \)8,150. The company does not carry fire insurance on its inventory. Instructions Prepare a formal labeled schedule computing the fire loss incurred. (Do not use the retail inventory method.)

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