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Assume the perpetual inventory method is used.
1)The company purchased $12,500 of merchandise on account under terms 2/10,n/30.
2)The company returned $1,200 of merchandise to the supplier before payment was made.
3)The liability was paid within the discount period.
4)All of the merchandise purchased was sold for $18,800 cash.
-The amount of gross margin from the four transactions is:

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Use the following for questions 
Assume the perpetual inventory method is used.
1)The company purchased $12,500 of merchandise on account under terms 2/10,n/30.
2)The company returned $1,200 of merchandise to the supplier before payment was made.
3)The liability was paid within the discount period.
4)All of the merchandise purchased was sold for $18,800 cash.
-The amount of gross margin from the four transactions is:

Quizplus · Accepted Answer

- The company purchased $12,500 of merchandise on account, but returned $1,200 of it, so the net purchases were $11,300 ($12,500 - $1,200).
- Since the terms were 2/10,n/30, the company could take a 2% discount if it paid within 10 days, which would be $226 ($11,300 x 0.02).
- The liability was paid within the discount period, so the amount paid was $11,074 ($11,300 - $226).
- The cost of goods sold is the net purchases ($11,300) plus any other costs (such as transportation) necessary to get the merchandise ready for sale. Since the problem doesn't provide any information about additional costs, we'll assume the cost of goods sold is $11,300.
- The gross margin is the selling price ($18,800) minus the cost of goods sold ($11,300), or $7,500.
- Therefore, the amount of gross margin from the four transactions is $7,500, which corresponds to option B.

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