Accounting Please Help!

Question

Two different companies, Ripper and Berners, entered into the following inventory transactions during December. Both companies use a perpetual inventory system.

•
December 3 – Ripper Corporation sold inventory on account to Berners Corp. for $495,000, terms 1/10, n/30. This inventory originally cost Ripper $309,000.
•
December 8 – Berners Corp. returned inventory to Ripper Corporation for a credit of $3,000. Ripper returned this inventory to inventory at its original cost of $1,873.
• December 12 – Berners Corp. paid Ripper Corporation for the amount owed.

Required:
a.
Prepare the journal entries to record these transactions on the books of Ripper Corporation. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)

b.
What is the amount of net sales to be reported on Ripper Corporation's income statement?



c.
What is the Ripper Corporation's gross profit percentage? (Round your answer to the nearest whole percent (i.e., 0.1234 should be entered as 12)

Answer 1

a) All 3 transactions should be recorded on Ripper's books.

 

b) Gross sales should be reduced by the inventory return and the sales discount.

 

c) Gross profit percentage = gross profit (after inventory returns) / net sales (as calculated in part b) 

 

 

Answer 2

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