Question
Hair World Inc. is a wholesaler of hair supplies. Hair World uses a perpetual inventory system. The following transactions (summarized) have been selected for analysis:
Hair World Inc. is a wholesaler of hair supplies. Hair World uses a perpetual inventory system. The following transactions (summarized) have been selected for analysis: |
a. | Sold merchandise for cash (cost of merchandise $16,797). | $27,200 |
b. | Received merchandise returned by customers as unsatisfactory (but in perfect condition), for cash refund (original cost of merchandise $180). | 300 |
c. | Sold merchandise (costing $3,325) to a customer, on account with terms 2/10, n/30. | 7,000 |
d. | Collected half of the balance owed by the customer in (c) within the discount period. | 3,430 |
e. | Granted a partial allowance relating to credit sales that the customer in (c) had not yet paid | 112 |
1. | Compute Sales Revenue, Net Sales, and Gross Profit for Hair World. |
Sales Revenue | |
Net Sales and Gross Profit |
2. | Compute the gross profit percentage. (Round your answer to 1 decimal place.) |
3. | Prepare journal entries to record transactions (a)(e). |
4. Hair World is considering a contract to sell merchandise to a hair salon chain for $12,000. This merchandise will cost Hair World $8,560. What would be the increase (or decrease) to Hair Worlds gross profit and gross profit percentage? |
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