ACCOUNTING

1. During the current year, merchandise is sold for $1,375,000. The cost of the merchandise sold is $880,000.

a. What is the amount of the gross profit?

b. Compute the gross profit percentage (gross profit divided by sales).

c. Will the income statement necessarily report a net income? Explain.

E6-23 Determined amount to be paid on invoice check a $14,200 Determining the amount to be paid in full settlement of each of the following invoices assuming that credit for returns and allowances were received prior to payment and that all invoices were paid within the discount period Merchandise Freight paid by seller Returns and allowance a $15,000 - FOB destination n/30 $800 b 10,000 $400 FOB shipping point 2/10n/30 1,200 c 8,200 FOB shipping point1/10n/30 750 d 2,900 125 FOB shipping point2/10n/30 400 e 3,850 FOB shipping destination 2/10n/30 _

3. The following expenses were incurred by a merchandising business during the year. In which expense section of the income statement should each be reported: (a) selling, (b) administrative, or (c) other?

1. Advertising expense

2. Depreciation expense on store equipment

3. Insurance expense on office equipment

4. Interest expense on notes payable

5. Rent expense on office building

6. Salaries of office personnel

7. Salary of sales manager

8. Sales supplies used