Question

Computing Gross Profit The following data were taken from the accounts of Fluter Hardware, a small retail business. Sales $121,800 Sales returns and allowances 970 Sales discounts 560 Merchandise inventory, January 1 34,300 Purchases during the period 76,700 Purchases returns and allowances during the period 3,820 Purchases discounts taken during the period 2,460 Freight-in on merchandise purchased during the period 1,120 Merchandise inventory, December 31 32,000 Determine the gross profit.

Answer 1

Answer:

$46,430

Explanation:

Data provided in the question:

Sales = $121,800

Sales returns and allowances = 970

Sales discounts = 560

Merchandise inventory, January 1 = 34,300

Purchases during the period = 76,700

Purchases returns and allowances during the period = 3,820

Purchases discounts taken during the period = 2,460

Freight-in on merchandise purchased during the period = 1,120

Merchandise inventory, December 31 = 32,000

Now,

Net sales = Sales - Sales returns and allowances - Sales discounts

=  $121,800 - $970 - $560

= $120,270

Cost of good sold

= Opening Inventory + Net purchases + Freights - Closing Inventory

= 34,300 + ( 76,700 - 3,820 - 2,460 ) + 1,120 - 32,000

= $73,840

Therefore,

Gross profit = Net sales - Cost of good sold

= $120,270 -  $73,840

= $46,430