Assume the perpetual inventory method is used 1 Green Compan

Assume the perpetual inventory method is used.

1) Green Company purchased merchandise inventory that cost $16,400 under terms of 2/10, n/30 and FOB shipping point.

2) The company paid freight cost of $640 to have the merchandise delivered.

3) Payment was made to the supplier within 10 days.

4) All of the merchandise was sold to customers for $24,300 cash and delivered under terms FOB shipping point with freight cost amounting to $440.

The gross margin from these transactions of Green Company is

1. $7,148.

2. $8,228.

3. $7,588.

4. $7,788.

Solution

Calculate gross margin :

So answer is 3) $7588