During its first month of operations, Purrfect Pets purchased 5,400 bags of dog food at a cost of $2 a bag and sold all 5,400 bags of dog food on account with payment terms of 3/10, n/30 for $11 each. A total of 2,600 of these bags were sold to customers who paid within the discount period; the other customers paid after the discount period had ended. Sales allowances totaling $220 were granted to customers whose dogs did not like the dog food. Required: Calculate the gross profit for the month. Calculate the gross profit percentage for the month.

Question

Business

Jean Erickson

28 December, 00:38

During its first month of operations, Purrfect Pets purchased 5,400 bags of dog food at a cost of $2 a bag and sold all 5,400 bags of dog food on account with payment terms of 3/10, n/30 for $11 each. A total of 2,600 of these bags were sold to customers who paid within the discount period; the other customers paid after the discount period had ended. Sales allowances totaling $220 were granted to customers whose dogs did not like the dog food. Required: Calculate the gross profit for the month. Calculate the gross profit percentage for the month.

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Answers (1)

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Willow Williamson · Answer 1

the gross profit for the month is $47,522

the gross profit percentage for the month is 81.48%

Explanation:

gross profit calculation for the month

Sales (5,400 * $11) 59,400

Less Discount Allowed (2,600*$11*3%) (858)

Less Sales Allowances $220 (220)

Net Sales 58,322

Less Cost of Goods Sold

Opening Stock 0

Add Purchases (5,400 * $2) 10,800

Less Closing Stock 0 (10,800)

Gross Profit 47,522

gross profit percentage for the month

gross profit percentage = gross profit / sales * 100

= 47,522 / 58,322 * 100

= 81.48%