Zorro Company buys from wholesalers and resells a single product that costs $10 each unit. All purchases are paid in cash. There is a sales commission paid of 20% on each unit sold. Sales commissions and sales proceeds are also all in cash. Each unit sells for $30. In year 1 the firm purchased 20,000 units and sold 15,000 units. In year 2 it purchased 20,000 units and sold 17,800 units. The firm uses FIFO inventory method for inventory costing. Required 1: Assuming no other transaction happened, the amount of gross Sales Revenue in year 2 is: $ Required 2: Assuming no other transaction happened, the amount of gross margin on sales in year 2 is: $ Required 3: Assuming no other transaction happened, what was the profit on sales for year 2? $[

Zorro Company buys from wholesalers and resells a single product that costs $10 each unit. All purchases are paid in cash. There is a sales commission paid of 20% on each unit sold. Sales commissions and sales proceeds are also all in cash. Each unit sells for $30. In year 1 the firm purchased 20,000 units and sold 15,000 units. In year 2 it purchased 20,000 units and sold 17,800 units. The firm uses FIFO inventory method for inventory costing. Required 1: Assuming no other transaction happened, the amount of gross Sales Revenue in year 2 is: $ Required 2: Assuming no other transaction happened, the amount of gross margin on sales in year 2 is: $ Required 3: Assuming no other transaction happened, what was the profit on sales for year 2? $[

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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Question

Zorro Company buys from wholesalers and resells a single product that costs $10 each unit. All purchases are paid in cash. There is a
sales commission paid of 20% on each unit sold. Sales commissions and sales proceeds are also all in cash. Each unit sells for $30. In
year 1 the firm purchased 20,000 units and sold 15,000 units. In year 2 it purchased 20,000 units and sold 17,800 units. The firm uses
FIFO inventory method for inventory costing.
Required 1: Assuming no other transaction happened, the amount of gross Sales Revenue in year 2 is: $
Required 2: Assuming no other transaction happened, the amount of gross margin on sales in year 2 is: $
Required 3: Assuming no other transaction happened, what was the profit on sales for year 2? $

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