On November 1, 2012, Everett Janitorial Supply sold merchandise for $5,000, FOB

Question

On November 1, 2012, Everett Janitorial Supply sold merchandise for $5,000, FOB destination, 2/10, n/30. The merchandise coat $3,200. Everett paid transportation costs of $100. On November 6, 2012, merchandise of $1,000 from the Nov. 1 sale was returned. The returned merchandise has a cost of $600. Everett received payment for the balance of the sale on November 10, 2012. If this were the only sales transaction of the period, what amount of Gross profit would be shown on the income statement? <?xml:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" /?>

A.) 3,920

B,) 1,320

C.) 2,400

D.) 1,800

Explanation / Answer

3,920 net sales (5000 - 1000)*.98 = 3920 -2,600 cost of sales (3200 - 600) = 1320 gross profit B, 1320

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