Nicole’s Getaway Spa (NGS) has been so successful that Nicole has decided to expand her spa byselling merchandise. She sells things such as nail polish, at-home spa kits, cosmetics, and aromatherapy items. Nicole uses a perpetual inventory system and is starting to realize all of the workthat is created when inventory is involved in a business. The following transactions were selectedfrom among those completed by NGS in August.Aug. 2 Sold 10 items of merchandise to Salon World on account at a selling price of$1,000 (total); terms 2/10, n/30. The goods cost NGS $650.Aug. 3 Sold 5 identical items of merchandise to Cosmetics R Us on account at a sellingprice of $500 (total); terms 2/10, n/30. The goods cost NGS $400.Aug. 6 Cosmetics R Us returned one of the items purchased on August 3. The itemcould still be sold by NGS in the future and credit was given to the customer.Aug. 10 Collected payment from Salon World, fully paying off the account balance.Aug. 20 Sold two at-home spa kits to Meghan Witzel for $300 cash. The goods cost NGS $96.Aug. 22 Cosmetics R Us paid its remaining account balance in full.Required:1. Prepare journal entries for each transaction.2. Calculate the amount of Net Sales and Cost of Goods Sold for the transactions listed above.What is Nicole’s Getaway Spa’s gross profit percentage (round to one decimal place)? Explainto Nicole what this gross profit percentage means.
Nicole’s Getaway Spa (NGS) has been so successful that Nicole has decided to expand her spa by
selling merchandise. She sells things such as nail polish, at-home spa kits, cosmetics, and aromatherapy items. Nicole uses a perpetual inventory system and is starting to realize all of the work
that is created when inventory is involved in a business. The following transactions were selected
from among those completed by NGS in August.
Aug. 2 Sold 10 items of merchandise to Salon World on account at a selling price of
$1,000 (total); terms 2/10, n/30. The goods cost NGS $650.
Aug. 3 Sold 5 identical items of merchandise to Cosmetics R Us on account at a selling
price of $500 (total); terms 2/10, n/30. The goods cost NGS $400.
Aug. 6 Cosmetics R Us returned one of the items purchased on August 3. The item
could still be sold by NGS in the future and credit was given to the customer.
Aug. 10 Collected payment from Salon World, fully paying off the account balance.
Aug. 20 Sold two at-home spa kits to Meghan Witzel for $300 cash. The goods cost NGS $96.
Aug. 22 Cosmetics R Us paid its remaining account balance in full.
Required:
1. Prepare
2. Calculate the amount of Net Sales and Cost of Goods Sold for the transactions listed above.
What is Nicole’s Getaway Spa’s gross profit percentage (round to one decimal place)? Explain
to Nicole what this gross profit percentage means.
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