Question

Assume the perpetual inventory system is used. 1) Green Company purchased merchandise inventory that cost $16,100 under terms of 3/10, n/30 and FOB shipping point. 2) Green Company paid freight cost of $610 to have the merchandise delivered. 3) Payment was made to the supplier on the inventory within 10 days. 4) All of the merchandise was sold to customers for $23,700 cash and delivered under terms FOB destination with freight cost amounting to $410. What is the amount of gross margin that results from these transactions

Answer 1

The gross margin resulting from these transactions is $7,400.

Step-by-step explanation:

The gross margin can be calculated by subtracting the cost of goods sold from the sales revenue. In this case, the cost of goods sold consists of the cost of the merchandise inventory and the freight cost. The sales revenue is the amount received from selling the merchandise to customers.

First, calculate the cost of goods sold. The merchandise inventory cost $16,100 and the freight cost $610, so the total cost is $16,100 + $610 = $16,710.

Next, calculate the sales revenue. The merchandise was sold for $23,700 and the freight cost $410, so the total revenue is $23,700 + $410 = $24,110.

Finally, subtract the cost of goods sold from the sales revenue to get the gross margin. $24,110 - $16,710 = $7,400.

Answer 2

$7,473

Step-by-step explanation:

Calculation to determine the amount of gross margin that results from these transactions

First step is to calculate COGS

COGS=$16,100-($16,100 * 0.03)+$610

COGS=$16,100-$483+$610

COGS=$16,227

Now let calculate the Gross margin

Using this formula

Gross margin = Sales revenue - COGS

Let plug in the formula

Gross margin=$23,700 - $16,227

Gross margin =$7,473

Therefore the amount of gross margin that results from these transactions is $7,473