calculate the profit margin ratio and the gross profit rate assume operating expense 565458

Aug 29, 2021 | Uncategorized

Cordell Distributing Company completed these merchandising transactions in the month of April. At the beginning of April, the ledger of Cordell showed Cash of $9,000 and Common Stock of $9,000.

Apr.

2

Purchased merchandise on account from Lang Supply Co. $8,300, terms
2/10, n/30.

4

Sold merchandise on account $6,000, terms 2/10, n/30. The cost of the
merchandise sold was $3,700.

5

Paid $200 freight on April 4 sale.

6

Received credit from Lang Supply Co. for merchandise returned $300.

11

Paid Lang Supply Co. in full, less discount.

13

Received collections in full, less discounts, from customers billed on April 4.

14

Purchased merchandise for cash $4,700.

16

Received refund from supplier for returned merchandise on cash purchase
of April 14, $500.

18

Purchased merchandise from Great Plains Distributors $5,500, terms 2/10,
n/30.

20

Paid freight on April 18 purchase $100.

23

Sold merchandise for cash $8,300. The cost of the merchandise sold was
$5,820.

26

Purchased merchandise for cash $2,300.

27

Paid Great Plains Distributors in full, less discount.

29

Made refunds to cash customers for returned merchandise $180. The returned
merchandise had a cost of $120.

30

Sold merchandise on account $3,980, terms n/30. The cost of the merchandise
sold was $2,500.

Cordell Distributing Company’s chart of accounts includes Cash, Accounts Receivable, Merchandise Inventory, Accounts Payable, Common Stock, Sales, Sales Returns and Allowances, Sales Discounts, Cost of Goods Sold, and Freight out.

Instructions

(a) Journalize the transactions.

(b) Post the transactions to T accounts. Be sure to enter the beginning cash and common stock balances.

(c) Prepare the income statement through gross profit for the month of April 2010.

(d) Calculate the profit margin ratio and the gross profit rate. (Assume operating expenses were $2,050.)