Fundamentals of Financial Accounting 4th Edition by Fred Phillips,Robert Libby,Patricia Libby

Exercise 29

Recording Cash Sales, Credit Sales, Sales Discounts, Sales Returns, and Sales Allowances and Analyzing Gross Profit Percentage
Campus Stop, Incorporated, is a student co-op. Campus Stop uses a perpetual inventory system. The following transactions (summarized) have been selected from 2013:
a.

b.

c.

d.

e.

Required:
1. Compute Sales Revenue, Net Sales, and Gross Profit for Campus Stop.
2. Compute the gross profit percentage (using the formula shown in this chapter).
3. Prepare journal entries to record Transactions ( a )-( e ).
4. Campus Stop is considering a contract to sell merchandise to a campus organization for $15,000. This merchandise will cost Campus Stop $12,000. Would this contract increase (or decrease) Campus Stop's gross profit and gross profit percentage How should Campus Stop decide whether to accept the contract
TIP : The impact on gross profit (a dollar amount) may differ from the impact on gross profit percentage.