Assume the perpetual inventory method is used. Vernon Company purchased merchand
ID: 2498544 • Letter: A
Question
Assume the perpetual inventory method is used.
Vernon Company purchased merchandise inventory that cost $16,500 under terms of 2/10, n/30 and FOB shipping point.
The company paid freight cost of $800 to have the merchandise delivered.
Payment was made to the supplier within 30 days.
All of the merchandise was sold to customers on account for $25,700 and delivered under terms FOB shipping point with freight cost amounting to $500.
The gross margin from these transactions of Vernon Company is
1)Vernon Company purchased merchandise inventory that cost $16,500 under terms of 2/10, n/30 and FOB shipping point.
2)The company paid freight cost of $800 to have the merchandise delivered.
3)Payment was made to the supplier within 30 days.
All of the merchandise was sold to customers on account for $25,700 and delivered under terms FOB shipping point with freight cost amounting to $500.
Explanation / Answer
Gross margin = sales - Freight on sales - purchases- freight cost on purchases
= 25700 - 500 - 16500 - 800
=$7900
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