What is the primary purpose of ABC's T.R.A.C.E. program?
1 answer:
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Answer:
The entries are as follows
To record estimated returns on Sales
Debit: Sales Refund Payable Account $131,400
Credit: Accounts Receivables $131,400
To record estimated Cost of Sales returns
Debit: Inventory Returns Estimated Account $77,700
Credit: Inventory on Sales on Returns $77,700
Explanation:
To derive the figure for Sales Refund payable for the year
6% of $2,190,000
= = $131,400
To derive the figure for Inventory cost on Sales Refund payable for the year
6% of $1,295,000
= = $77,700
Answer:
Gross profit percentage = Gross profit / Net sales
= (Net sales - COGS) / Net sales
= (250,000 - 150,000) / 250,000
= 40%
Return on sales ratio = EBIT / Net sales
= (Gross profit + other income - Administrative expenses - Other expense - Selling expenses) / Net sales
= (250,000 - 150,000 + 15,000 - 10,000 - 10,000 - 50,000) / 250,000
= 18%
<u>With new product:</u>
Gross profit percentage = Gross profit / Net sales
= (Net sales - COGS) / Net sales
= (250,000 + 45,000 - 150,000 - 38,000) / (250,000 + 45,000)
= 36.3%
Return on sales ratio = EBIT / Net sales
= (Gross profit + other income - Administrative expenses - Other expense - Selling expenses) / Net sales
= (250,000 + 45,000 - 150,000 - 38,000 + 15,000 - 10,000 - 10,000 - 50,000) / (250,000 + 45,000)
= 52,000 / 295,000
= 17.6%
