GHI Company established a sales agency ina different location. Upon the establishmentof the sales agency, the home office sentmerchandise samples costing P10,000 and acash working fund of P50,000 to be maintainedon the imprest basis. During the month of June,the sales agency reported to the home officesales orders. These were billed at P170,000, ofwhich half was collected. The sales agency paidexpenses of P45,800 but was reimbursed by thehome office. At the end of the month there wasno samples left. It was estimated that the grossprofit on goods shipped to fill sales agencysales orders averaged 60% of sales. What is thenet income of the sales agency for the currentmonth?

The net income of the sales agency can be computed by subtracting the agency's expenses from the…

Answered: sales orders averaged 60% of sales.…

Business

Accounting

sales orders averaged 60% of sales. What is the net income of the sales agency for the current month?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Conversion Cycle

Conversion cycle is also known as cash cycle or net operating cycle. Conversion cycle refers to how much time a company takes to turn its investments which is done from stock or any other financial resources into cash flows from sales.

Question

GHI Company established a sales agency in
a different location. Upon the establishment
of the sales agency, the home office sent
merchandise samples costing P10,000 and a
cash working fund of P50,000 to be maintained
on the imprest basis. During the month of June,
the sales agency reported to the home office
sales orders. These were billed at P170,000, of
which half was collected. The sales agency paid
expenses of P45,800 but was reimbursed by the
home office. At the end of the month there was
no samples left. It was estimated that the gross
profit on goods shipped to fill sales agency
sales orders averaged 60% of sales. What is the
net income of the sales agency for the current
month?

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