Abbey Co. sold merchandise to Gomez Co. on account, $35,000, terms 2/15, net 45. The cost of the merchandise sold is $24,500. Abbey Co. issued a credit memo for $3,600 for merchandise returned that originally cost $1,700. Gomez Co. paid the invoice within the discount period. What is the amount of gross profit earned by Abbey Co. on the above transactions?

Question

Quizplus · Accepted Answer

The gross profit is calculated as sales revenue minus the cost of goods sold. The net sales after the return and discount is $30,772 ($35,000 - $3,600 - $640 discount). The cost of goods sold is $22,800 ($24,500 - $1,700). Thus, the gross profit is $7,972 ($30,772 - $22,800).

Abbey Co Sold Merchandise to Gomez Co