Purchase-Related Transactions
Journalize entries for the following related transactions ofLilly Heating & Air Company:
a. Purchased $25,000 of merchandise from Schell Co. on account,terms 2/10, n/30.
b. Paid the amount owed on the invoice within the discountperiod.
c. Discovered that $5,000 before purchases discount of themerchandise was defective and returned items, receiving credit.
d. Purchased $3,900 of merchandise from Schell Co. on account,terms n/30.
e. Received a check for the balance owed from the return in (c),after deducting for the purchase in (d).
Determining Gross Profit
During the current year, merchandise is sold for $609,000. Thecost of the goods sold is $347,130.
a. What is the amount of the grossprofit?
$
b. Compute the gross profit percentage (grossprofit divided by sales). Round to the nearest whole number.
%
c. When will the income statement report netincome?
