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Hair World Inc. is a wholesaler of hair supplies. Hair Worlduses a perpetual inventory system. The following transactions(summarized) have been selected for analysis: a. Sold merchandisefor cash (cost of merchandise $10,797). $15,200 b. Receivedmerchandise returned by customers as unsatisfactory (but in perfectcondition), for cash refund (original cost of merchandise $90). 150c. Sold merchandise (costing $2,613) to a customer, on account withterms 2/10, n/30. 5,500 d. Collected half of the balance owed bythe customer in (c) within the discount period. 2,695 e. Granted apartial allowance relating to credit sales that the customer in (c)had not yet paid 88

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Bunny Greenfelder
Bunny GreenfelderLv2
28 Sep 2019

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[The following information applies to the questions displayed below.]

Hair World Inc. is a wholesaler of hair supplies. Hair World uses a perpetual inventory system. The following transactions (summarized) have been selected for analysis:


a. Sold merchandise for cash (cost of merchandise $10,797). $15,200
b.

Received merchandise returned by customers as unsatisfactory (but in perfect condition), for cash refund (original cost of merchandise $90).

 150
c. Sold merchandise (costing $2,613) to a customer, on account with terms 2/10, n/30. 5,500
d. Collected half of the balance owed by the customer in (c) within the discount period. 2,695
e. Granted a partial allowance relating to credit sales that the customer in (c) had not yet paid 88
Required:
1. Compute Sales Revenue, Net Sales, and Gross Profit for Hair World.
Sales Revenue
Net Sales
Gross Profit
2. Compute the gross profit percentage. (Round your answer to 1 decimal place.)
Gross Profit Percentage %
3.

Prepare journal entries to record transactions (a)–(e). (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)


a1) Record the cash sales of $15,200.

a2) Record the cost of goods sold of $10,797.

b1) Record the return by a customer of unsatisfactory merchandise that was in perfect condition. A cash refund of $150 was given to the customer.

b2) Record the merchandise returned by the customer back into inventory. The original cost of the merchandise was $90.

c1) Record the sales on account of $5,500 on terms 2/10, n/30.

c2) Record the cost of goods sold of $2,613.

d) Record the collection of half of the balance of $2,695 owed by the customer within the discount period.

e) Record the allowance of $88 granted to the customer.

Hair World Inc. is a wholesaler of hair supplies. Hair World uses a perpetual inventory system. The following transactions (summarized) have been selected for analysis: a. Sold merchandise for cash (cost of merchandise $8,797). $11,200 b. Received merchandise returned by customers as unsatisfactory (but in perfect condition), for cash refund (original cost of merchandise $60). 100 c. Sold merchandise (costing $2,375) to a customer, on account with terms 2/10, n/30. 5,000 d. Collected half of the balance owed by the customer in (c) within the discount period. 2,450 e. Granted a partial allowance relating to credit sales that the customer in (c) had not yet paid 80

1.

Compute Sales Revenue, Net Sales, and Gross Profit for Hair World.

2.

Compute the gross profit percentage.

3.

Prepare journal entries to record transactions (a)–(e). (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)

4.

Hair World is considering a contract to sell merchandise to a hair salon chain for $10,000. This merchandise will cost Hair World $7,600. What would be the increase (or decrease) to Hair World’s gross profit and gross profit percentage?

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