Two different companies, Ripper and Berners, entered into the following inventor

Question

Two different companies, Ripper and Berners, entered into the following inventory transactions during December. Both companies use a perpetual inventory system. • December 3 – Ripper Corporation sold inventory on account to Berners Corp. for $481,000, terms 2/10, n/30. This inventory originally cost Ripper $307,000. • December 8 – Berners Corp. returned inventory to Ripper Corporation for a credit of $3,600. Ripper returned this inventory to inventory at its original cost of $2,298. • December 12 – Berners Corp. paid Ripper Corporation for the amount owed.

Prepare the journal entries to record these transactions on the books of Ripper Corporation. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)

Journal Entry Worksheet:

1. Dec 03, Record the entry for sale of inventory on account.

2. Dec 03, Record the entry for cost of inventory sold on account from inventories.

3. Dec 08, Record the entry for return of inventory sold on account.

4. Dec 08, Record the entry for reversal of cost of inventory sold on account.

5. Dec 12, Record the entry for receipt of accounts receivable and related sales discount for terms 2/10, n/30.

b.

What is the amount of net sales to be reported on Ripper Corporation's income statement?

c. What is the Ripper Corporation's gross profit percentage? (Round your answer to the nearest whole percent (i.e., 0.1234 should be entered as 12)

Explanation / Answer

JOURNAL ENTRY WORKSHEET:

1. SALES OF INVENTORY:

   BERNERS CORP. A/C Dr. $481000

To SALES A/C $481000

(BEING GOODS SOLD TO BERNERS CORP.)

2. COST OF INVENTORY:

   COST OF GOODS SOLD A/C Dr. $307000

To INVENTORY A/C $307000

(BEING COST OF GOODS SOLD)

3. RETURN OF INVENTORY:

  SALES A/C Dr. $3600

   TO SALES RETURN A/C $3600

(BEING SOLD GOODS IS RETURNED)

4. REVERSAL OF COST OF INVENTORY:

   NO ENTRY

5. ACCOUNTS RECEIVABLE:

CASH A/C Dr. $467852

   DISCOUNT A/C Dr. $9548

TO BERNERS CORP. $477400

(BEING CASH RECEIVED FROM DEBTOR)

B). NET SALES:

SALES $481000

-SALES RETURN $3600

NET SALES $477400

-DISCOUNT $9548

INCOME $467852   

C)GROSS PROFIT PERCENTAGE:

SALES- COST OF GOODS SOLD*100/SALES

   $477400-$304702*100/$477400

=36%

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