Question

Item1 1 points eBookPrintReferences Check my work Check My Work button is now enabledItem 1Item 1 1 points Assume the perpetual inventory method is used. 1) The company purchased $13,900 of merchandise on account under terms 2/10, n/30. 2) The company returned $3,400 of merchandise to the supplier before payment was made. 3) The liability was paid within the discount period. 4) All of the merchandise purchased was sold for $21,800 cash. The amount of gross margin from the four transactions is: Multiple Choice $11,578. $11,510. $7,742. $7,900.

Answer 1

Answer:

$11,510

Explanation:

Calculation for the gross margin amount from the four transactions

First is to find the Cost of goods sold

Cost of goods sold = ($13,900 - $3,400) × (100%-2%)

Cost of goods sold=$10,500*0.98

Cost of goods sold=$10,290

Last step is to find the gross margin amount using this formula

Gross margin amount=Sales revenue - Cost of goods sold

Let plug in the formula

Gross margin amount=$21,800-$10,290

Gross margin amount=$11,510

Therefore the gross margin amount from the four transactions will be $11,510