Les Fleurs, a boutique in Paris, France, had the following accounts in its accounting records at December 31, 20X2 (amounts in Euros, denoted as "E")
Purchases………………...
E250,000 Freight In……………… E8,000
Sales discounts…………. 4,000 Purchase returns…….. 7,000
Inventory Sales…………………. 400,000
December 31, 20X1….. 20,000 Purchase discounts…. 3,000
December 31, 20X2….. 30,000 Sales returns…………. 8,000
Compute the following for Les Fleurs during 20X2: (Do not convert the figures to US dollars.)
Net sales revenue
Cost of goods sold
Gross profit
NET SALES REVENUE:
Inventory Sales…………………. 400,000
Less: Sales discounts…………. 4,000
Less: Sales returns…………. 8,000
Net Sales Revenue = 388,000
COGS = Opening Inventory + Net Purchases - Ending Inventory
COGS Calculation:
December 31, 20X1….. 20,000
Add Net Purchases 248,000
Less December 31, 20X2….. 30,000
TOTAL COGS = 238,000
Net Purchases is calculated as:
Purchases………………... E250,000
Less: Purchase returns…….. 7,000
Less: Purchase discounts…. 3,000
Add: Freight In……………… E8,000
Net Purchases = 248,000
GROSS PROFIT = 388,000 – 238,000 = 150,000
To compute the net sales revenue, cost of goods sold, and gross profit for Les Fleurs during 20X2, we need to follow these steps:
1. Calculate net sales revenue:
Net sales revenue is the total sales revenue minus any sales discounts and sales returns.
Net sales revenue = Sales revenue - Sales discounts - Sales returns
In this case, the sales revenue is 400,000 Euros, sales discounts are 4,000 Euros, and sales returns are 8,000 Euros.
Net sales revenue = 400,000 - 4,000 - 8,000 = 388,000 Euros
So, the net sales revenue for Les Fleurs during 20X2 is 388,000 Euros.
2. Calculate cost of goods sold:
The cost of goods sold is the cost of the inventory sold during the period. It includes the purchases, freight in, and purchase returns, minus purchase discounts and the ending inventory.
Cost of goods sold = Purchases + Freight In - Purchase Returns - Purchase Discounts - Ending Inventory
In this case, the purchases are 250,000 Euros, freight in is 8,000 Euros, purchase returns are 7,000 Euros, purchase discounts are 3,000 Euros, and the ending inventory is 30,000 Euros.
Cost of goods sold = 250,000 + 8,000 - 7,000 - 3,000 - 30,000 = 218,000 Euros
So, the cost of goods sold for Les Fleurs during 20X2 is 218,000 Euros.
3. Calculate gross profit:
Gross profit is the difference between net sales revenue and the cost of goods sold.
Gross profit = Net sales revenue - Cost of goods sold
In this case, the net sales revenue is 388,000 Euros and the cost of goods sold is 218,000 Euros.
Gross profit = 388,000 - 218,000 = 170,000 Euros
So, the gross profit for Les Fleurs during 20X2 is 170,000 Euros.