Question

Required information [The following information applies to the questions displayed below.] Hair World Inc. is a wholesaler of hair supplies. Hair World uses a perpetual inventory system. The following transactions (summarized) have been selected for analysis: $75,200 a. Sold merchandise for cash (cost of merchandise $40,797). b. Received merchandise returned by customers as unsatisfactory (but in perfect condition) for cash refund (original cost of merchandise $540 ). c. Sold merchandise (costing $7,600 ) to a customer on account with terms n/60. d. Collected half of the balance owed by the customer in (c). e. Granted a partial allowance relating to credit sales the customer in (c) had not yet paid. ndise (costing W owed by the customer in 900 16,000 8,000 256 iustomer in (c) had not

Answer 1

1) Calculate following

Sales revenue (75200+16000)	91200
Less: Sales return and allowance (900+256)	-1156
Net Sales	90044

Cost of goods sold = 40797+7600-540 = 47857

Gross profit = Sales-Cost of goods sold = 90044-47857 = 42187