1. During the current year, merchandise is sold for $11,750,000. The cost of the goods sold is $7,050,000. a. What is the amount of the gross profit? b. Compute the gross profit percentage (gross profit divided by sales). c. Will the income statement always report a net income? Explain 2. Journalize entries for the following related transactions of Lilly Heating & Air Company: a. Purchased $36,000 of merchandise from Schell Co. on account, terms 1/10, n/30. b. Paid the amount owed on the invoice within the discount period c. Discovered that $9,000 of the merchandise purchased in (A) was defective and returned items, receiving credit. d. Purchased $5,000 of merchandise from Schell Co. on account, terms n/30. e. Received a refund from Schell Co. for return in (C) less the purchase in (D). 3. Senger Company sold merchandise of $15,500, terms 2/10, n/30, to Burris Inc. on April 23. Burris paid Senger for the merchandise on May 2. On May 12, Senger paid Burris $650 for costs incurred by Burris to repair defective merchandise. a. Journalize the entry by Senger Company to record the customer refund to Burris Inc. b. Assume that instead of paying Burris cash, Senger issued a credit memo to Burris to be used against Burris's outstanding account receivable balance. Journalize the entry by Senger Company to record the issuance of the credit memo. 4. A sale of merchandise on account for $36,000 is subject to an 8% sales tax. a. Should the sales tax be recorded at the time of sale or when payment is received? b. What is the amount credited to sales? c. What is the amount debited to Accounts Receivable? d. What is the account to which the $2,880 ($36,000 8%) is credited? 5. Record journal entries for the following sales transactions of Flower Company: a. Oct. 12 Sold 25 bushels of flowers to a customer for $1,000 cash; cost of sale $700. b. Oct. 21 Sold 40 bushels of flowers for $30 per bushel on credit. Terms of the sale are 4/10, n/30, invoice dated October 21. Cost per bushel is $20 to Flower Company. Oct. 31 Received payment in full from the October 21 sale. C