Chapter 6, Problem 6.20E

(a)

To determine

Gross Profit Percentage:

Gross is the financial ratio that shows the relationship between the gross profit and net sales. It represents gross profit as a percentage of net sales. Gross Profit is the difference between the net sales revenue, and the cost of goods sold. It can be calculated by using the following formula:

$\text{Gross profit percentage}=\frac{\text{Gross profit}}{\text{Net sales}}\times 100$

The cost of the merchandise lost by fire of Company H, assuming a beginning inventory of $ 20,000, and a gross profit rate of 40% on net sales.

(b)

To determine

Gross Profit Percentage:

Gross is the financial ratio that shows the relationship between the gross profit and net sales. It represents gross profit as a percentage of net sales. Gross Profit is the difference between the net sales revenue, and the cost of goods sold. It can be calculated by using the following formula:

$\text{Gross profit percentage}=\frac{\text{Gross profit}}{\text{Net sales}}\times 100$

The cost of the merchandise lost by fire of Company H, assuming a beginning inventory of $ 30,000, and a gross profit rate of 30% on net sales.