Answer:
The amount of gross profit earned by Abbey Co. on the above transactions is $7,554.00
Step-by-step explanation:
What is the gross profit of Abbey Co?
Note that after sales of goods of $29,300 whose cost is $20,510 to Gomez Co, Gomez returned goods whose selling price is $2,500 and cost originally $1,800 to Abbey Co.
The implication of such goods returned is that $2,500 would be deducted from selling price and $1,800 would be deducted from cost of goods sold.
selling price=$29,300-$2,500
selling price=$26,800.00
cost of goods sold=$20,510-$1,800
cost of goods sold=$18,710.00
Note again that Gomez paid the invoice within the discount period, which means that net sales is the selling price of $26,800.00 minus 2% discount(2/15 means a discount of 2% is available if credit sales is settled in cash within the first 15 days of making sales0
net sales=$26,800.00*(1-2%)
net sales=$26,264.00
The gross profit is net sales minus the cost of goods sold
gross profit= $26,264.00-$18,710.00
gross profit=$7,554.00
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