ACCT 2110 CE #3 (Chapter 5)
Item a: The adjusted trial balance of Entity B included the following selected accounts:
Debit Credit
Sales Revenue $645,000
Sales Returns and Allowances $ 50,000
Sales Discounts 9,500
Cost of Goods Sold 396,000
Freight-Out 2,000
Advertising Expense 15,000
Interest Expense 19,000
Salaries and Wages Expense 84,000
Utilities Expense 23,000
Depreciation Expense 3,500
Interest Revenue 25,000
Instructions
1. Use the above information to prepare a multiple-step income statement for the year ended December 31, 2022.
2. Calculate the profit margin and gross profit rate.
3. Suggest three ways that either the gross profit rate or profit margin might be increased.
Item b: Entity C sold Entity D $10,000 of merchandise, terms 3/10, net 30. Entity C paid $5,000 for the merchandise.
Instructions
1. Journalize the sale on Entity C's books.
2. If Entity D returned 2500 of the merchandise, and paid for the remainder 11 days from the date of the sales invoice, how much did Entity D remit (pay) Entity C?