Assume Beta Company uses the perpetual inventory method and engaged in the following transactions:
1) Purchased $5,000 of merchandise on account under terms 2/10, n/30.
2) Returned $600 (list price) of merchandise to the supplier before payment was made.
3) Paid the account payable within the discount period.
4) Sold the merchandise for $6,500 cash.
The amount of gross margin from the four transactions is

Question

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1) The cost of the merchandise purchased is $5,000.
2) The cost of the merchandise returned is $600.
3) The discount received on the payment is 2% of $4,400 [$5,000 - $600 (returned merchandise)] = $88.
4) The cost of goods sold is $4,000 [$5,000 (purchased merchandise) - $600 (returned merchandise) - $88 (discount received)].
Therefore, the gross margin is $2,500 [$6,500 (sales) - $4,000 (cost of goods sold)] and the answer is C) $2,188 ($2,500 - $312 (2% of $5,000)).

Assume Beta Company Uses the Perpetual Inventory Method and Engaged