Rice Co. sold for $12,000 inventory that had cost $8,000. Freight terms for the sale were FOB destination and payment terms were 1/10, n/30. Rice records sales transactions at the gross amount. Rice paid freight costs of $400 in cash. The receivable was collected within the discount period. Based on this information alone, the amount of gross margin would be: a. $3,480 b. $3,880 c. $3,600 d. $4,000

Principles of Accounting Volume 1
19th Edition
ISBN:9781947172685
Author:OpenStax
Publisher:OpenStax
Chapter6: Merchandising Transactions
Section: Chapter Questions
Problem 19Q: The following is select account information for Sunrise Motors. Sales: $256,400; Sales Returns and...
icon
Related questions
Question
100%

Tutor help needed

Rice Co. sold for $12,000 inventory that had cost $8,000. Freight terms
for the sale were FOB destination and payment terms were 1/10, n/30.
Rice records sales transactions at the gross amount. Rice paid freight
costs of $400 in cash. The receivable was collected within the discount
period. Based on this information alone, the amount of gross margin
would be:
a. $3,480
b. $3,880
c. $3,600
d. $4,000
Transcribed Image Text:Rice Co. sold for $12,000 inventory that had cost $8,000. Freight terms for the sale were FOB destination and payment terms were 1/10, n/30. Rice records sales transactions at the gross amount. Rice paid freight costs of $400 in cash. The receivable was collected within the discount period. Based on this information alone, the amount of gross margin would be: a. $3,480 b. $3,880 c. $3,600 d. $4,000
Expert Solution
steps

Step by step

Solved in 2 steps

Blurred answer
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
Principles of Accounting Volume 1
Principles of Accounting Volume 1
Accounting
ISBN:
9781947172685
Author:
OpenStax
Publisher:
OpenStax College