I need to calculate the GROSS PROFIT of a company from the transaction list belo

Question

I need to calculate the GROSS PROFIT of a company from the transaction list below. I am utilizing the LIFO method in a perpetual inventory system. I have completed journal entries for this problem, but my current gross profit (which is $3,496.85) is off by "a few thousand" according to my teacher, so I need someone to explain to me where I'm going wrong, how to fix it, and what the CORRECT, SIGNIFICANTLY HIGHER GROSS PROFIT is. Thanks in advance!

8/6     Ts purchased 200 long sleeve blue shirts on account from Frooty for $3 each. Terms FOB-SP   2/10, n30 Shipping costs = $40

8/8      Ts purchased 500 short sleeve blue shirts on account from Frooty for $2.50 each. Terms FOB-D 2/15, n30 Shipping costs = $50

8/10    Ts notified Frooty that 50 of the long sleeve shirts were purple. After negotiation, Frooty agreed to reduce the price of those shirts to $2 each. Ts agreed to keep the shirts.

8/11    Ts purchased 400 long sleeve blue shirts on account from Frooty for $3.50 each. Terms FOB-D n/eom Shipping costs = $40

8/12    Ts sold 290 long sleeve blue shirts to RSkool on account for $8 each. Terms FOB-SP    1/10, n30 Shipping costs = $30

8/14    Ts paid for the purchase on the 6th.

8/16 Ts sold 20 long sleeve purple shirts to RSkool on account for $5 each. Terms FOB-D 2/10, n/eom Shipping costs = $5

8/18    Ts paid for the short sleeve shirts

8/20    Ts sold 380 short sleeve shirts to RSkool on account for $7 each. Terms FOB-SP n/eom   Shipping costs = $38

8/21    Ts received payment from RSkool for the long sleeve blue shirts

8/22    RSkool returned 100 of the short sleeve shirts because they were too small.

8/24    Ts sold 200 long sleeve blue shirts to RSkool on account for $8 each. Terms FOB-D   3/5, n/30 Shipping costs = $30

8/29    Ts received payment from RSkool for the purchase on the 24th

8/30    Ts received payment from RSkool for the purple shirts.

8/31    Ts received payment from RSkool for the purchase on the 20th

8/31    Ts paid for the purchase on the 11th.

Explanation / Answer

Date Purchase amt cost of Sales amt 6-Aug 200*3 600 8-Aug 450*2.5 1250 10-Aug 50*2 100 11-Aug 400*3.5 1400 12-Aug 290*3.5 1015 16-Aug 20*3.5 70 20-Aug 90*3.5 315 20-Aug 290*2.5 725 21-Aug -100*3.5 -350 24-Aug 100*3.5 350 24-Aug 100*3 300 3350 Cost of sales 2425 Shipping cost to be incurred 6-Aug 40 16-Aug 5 24-Aug 30 total 75 Discount received 6-Aug (600*2%) -12 8-Aug 1250*2% -25 Discount given: 12-Aug 2320*1% 23.2 net discount -13.8 Sales 12-Aug 290*8 2320 16-Aug 20*5 100 20-Aug 380*7 2660 24th 200*8 1600 Less: return 22-Aug 100*7 -700 Net sales 5980 Less: cost of sales 2425 3555 Shipping cost 75 Net discount -13.8 Gross profit 3616.2

Related Questions

Navigate

• Browse (All)
• Browse I
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.