Ballard Company uses the perpetual inventory system. The company purchased $8,600 of merchandise from Andes Company under the terms 2/10, net/30. Ballard paid for the merchandise within 10 days and also paid $310 freight to obtain the goods under terms FOB shipping point. All of the merchandise purchased was sold for $16,200 cash. What is the amount of gross margin that resulted from these business events?

Question

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- The cost of merchandise purchased is $8,600
- The discount for paying within 10 days is 2% of $8,600, which is $172
- The freight cost of $310 is added to the cost of merchandise
- The total cost of merchandise is $8,600 + $310 = $8,910
- The gross profit is the difference between the revenue and cost of merchandise, which is $16,200 - $8,910 = $7,290
- The gross margin is the gross profit expressed as a percentage of revenue, which is ($7,290 / $16,200) * 100% = 45%
Therefore, the amount of gross margin that resulted from these business events is $7,462 (rounded to the nearest dollar).

Ballard Company Uses the Perpetual Inventory System