gross profit

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BP GmbH used a perpetual inventory system and had the following transactions during a particular month: (a) Purchased merchandise for $25.000  on account. Credit terms: 2/10, n/30. (b) Paid freight bill of $470 , for merchandise purchased in (a). (c) Paid for merchandise purchased in (a) by taking all discounts to which it was entitled. (d) Sold merchandise for $15.000  to a customer on account. The cost of merchandise sold was $9.000 . Credit terms: 2/10, n/30. (e) $1.000  of merchandise sold in (d) was returned. The cost of merchandise returned was $600. Assuming that there were no other transactions, what would be the gross profit in this particular month?

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By paul.benny
18th Jan 2021 15:57

What's the magic word?

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Replying to paul.benny:
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By Ihaveaquestion
18th Jan 2021 16:03

I really don't know either

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Replying to Ihaveaquestion:
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By paul.benny
18th Jan 2021 16:30

Please

Conspicuously absent from your questions.

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By Yeadonian
18th Jan 2021 16:05

Sales: 14,000 (15,000 sales - 1,000 returns)
Cost of Sales: 8,400 (9,000 cost of sales - 600 cost of returns)
Gross Profit: 5,600

The purchase of stock, the credit terms and the payment via discounts are all balance sheet transactions, so have no impact on profit.

This appears to be a textbook question, so I'm not sure why it had to be posted anonymously. Please note the following guidance on how to use this forum:

"If there is an element of personal or professional sensitivity in your question, there is an option to post it anonymously. Please do not abuse this facility - your identity can be checked by the site moderators."

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Replying to Yeadonian:
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By Ihaveaquestion
18th Jan 2021 16:09

Sorry I'm new to this site. Thank you very much for your reply. If you are available, can I ask one more question related to this issue?

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Replying to Ihaveaquestion:
Psycho
By Wilson Philips
18th Jan 2021 16:13

Please stop. This site is not a training provider.

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Replying to Wilson Philips:
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By Ihaveaquestion
18th Jan 2021 16:16

Well, sorry.

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Replying to Ihaveaquestion:
Psycho
By Wilson Philips
18th Jan 2021 16:21

Your apology is accepted.

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Replying to Yeadonian:
Psycho
By Wilson Philips
18th Jan 2021 16:29

Perhaps it's the poor wording of the question, but discounts taken (and given) do usually affect the profit and loss.

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