Question

During its first month of operations, Purrfect Pets purchased 6,100 bags of dog food at a cost of $6 a bag and sold all 6,100 bags of dog food on account with payment terms of 2/10, n/30 for $10 each. A total of 2,400 of these bags were sold to customers who paid within the discount period; the other customers paid after the discount period had ended. Sales allowances totaling $200 were granted to customers whose dogs did not like the dog food. Required: Calculate the gross profit for the month. Calculate the gross profit percentage for the month

Answer 1

Gross Profit $23720

Gross profit percentage 39.323%

Step-by-step explanation:

The discounts allowed are subtracted from the sales .Also the sales allowances are deducted in the income statement.

Purrfect Pets

Sales units 6100

Sales Price $10

Sales $ 24000

Less Sales Discounts (2% of 10) *2400 (480)

Sales $ 23520

Add Sales without discount (6100-2400)*10 $37000

Total Sales $ 60520

Less Sales Allowances (200)

Net Sales $ 60320

Less Purchases (6100* 6) $ 36600

Gross Profit $23720

Gross profit percentage= Gross Profit /Sales *100 %

Gross profit percentage= $23720 / $ 60320* 100%= 39.323%