Question

jeet company and reece company use the perpetual inventory system. the following transactions occurred during the month of april: on april 1, jeet company purchased merchandise on account from reece company with credit terms of 2/10, n/30. the selling price of the merchandise was $4,900, and the cost of the merchandise sold was $2,450. on april 1, jeet paid freight charges of $100 cash to have the goods delivered to its warehouse. on april 8, jeet returned $1,000 of the merchandise which had originally cost reece $700. on april 10, jeet paid reece the balance due.

Answer 1

In a scenario where a company has $1 million in sales revenue and $950,000 in combined labor, capital, and material expenses, the accounting profit would be $50,000.

Step-by-step explanation:

The question relates to the perpetual inventory system and involves a series of transactions between Jeet Company and Reece Company during the month of April. The student needs to determine various aspects of these transactions, such as the computation of discounts, adjustments for returned merchandise, and the final payment made. For the self-check question provided, the firm's accounting profit would be calculated as follows:

• Total sales revenue: $1,000,000
• Total expenses: Labor ($600,000) + Capital ($150,000) + Materials ($200,000)
• Total expenses: $950,000
• Accounting profit: Sales revenue - Total expenses = $1,000,000 - $950,000 = $50,000